N EW N UTRITION BUSINESS - global-nutrition.co.jp€¦ · N EW N UTRITION BUSINESS VOLUME 15 NUMBER 1 –nutrition.com OCTOBER 2009 ISSN 1464-3308 Continued on page 3 Food and beverages

N E W N U T R I T I O N

B U S I N E S Swww.new–nutrition.com OCTOBER 2009 ISSN 1464-3308VOLUME 15 NUMBER 1

Continued on page 3

Food and beverages transformed – 15 years of innovationPages 5-6

“An important bet in innovation terms,” is how Jérôme Boesch, Manager of Danone SA, referred to Danone’s recent introduction in the Spanish market of a new yoghurt brand, called Densia, which targets bone health. With twice as much calcium as regular yoghurts, as well as other nutrients to promote calcium absorption, Densia is the first product of its kind on the Spanish market and may be the first in Europe.

If Danone can make the concept work in Spain, it gives the company a new type of product to take to all of its European markets, using a message that presents no challenges within the EU’s highly restrictive new health claims system.

Densia is a low-fat yoghurt that specifically targets women over 40, the age group who are most motivated by maintaining their bone health and who have proven to be a good market for similar bone health brands in Asia, such as Fonterra’s market-leading Anlene brand.

Packaged in a striking red – a colour not commonly associated with dairy and clearly

intended to stand out in the dairy section, where white predominates – the package carries a graphic showing a spine and prominently carries the claim:

Helps you to maintain your bone density(In Spanish: Ayuda a mantener tu densidad Osea)

Retailed in a four-pack of 125g pots, each 125g pot delivers a dose of 400mg of

calcium – twice as much as regular yoghurt and 50% of the RDV – as well as 5μg of vitamin D, 25% of the RDV. According to Danone, Densia is the only yoghurt on the Spanish market which contains this much calcium and the brand’s packaging flags up the high calcium plus vitamin D content.

Each 125g serve is low in total fat (1.9g per serve or 1.5g per 100g), has 7.8g of sugars and 73kcal (see nutrition facts and ingredients on page 3). A four-pack of Densia is priced at around €1.50 ($2.20), making it a mass market-priced item and it is available in strawberry, natural and natural-with-sugar flavours.

The launch of Densia is supported by a heavy but unspecified investment in TV and print advertising, devised by Young & Rubicam, as well as PR. The ambassador for the brand is Coco Comin, a dance choreographer who is famous in Spain in connection with the TV programme Operación Triunfo. She is also a former dancer with the Barcelona Corps de Ballet and the founder of Spain’s leading school of

Spain to be new bone health battleground

By Julian Mellentin and Laura Enbom

15th

Annivers

ary

Issue

Seven rules to increase your chances of successPages 7-10

Extreme polarisation: the future of consumer markets after the financial crisis?

Pages 11-13

Clif: how a David out-smarts a GoliathPages 21-23

OCTOBER 20092

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LEAD STORY

1,3-4 Spain to be new bone health

battleground

EDITORIAL

5-6 Food Transformed

7-10 Seven rules to increase your chances of

success

11-13 Extreme polarisation: the future of

consumer markets after the financial

crisis?

14 What coffee tells us about innovation

CASE STUDIES

15-17 CONSUMER: American consumers

embrace new habits

18-20 SPORTS: Chews and gels boost energy

21-23 INNOVATION: Clif: how a David out-

smarts a Goliath

24-25 SPORTS NUTRITION: Sports drink

muscling in on the mainstream

26-27 VEGETABLES: Back-to-basics mood

boosts cans

NEW PRODUCTS

28-30 Functional & healthy-eating new

product launches

NEW NUTRITION ON THE NET

31 Get the most from your subscription

32 A polite reminder to our subscribers

IMPORTANT NOTICE

33 NNB now in powerpoint!

34 What NNB gives you

NEW REPORTS

35 Failures in Functional Foods &

Beverages

36 Marketing Kids’ Healthy Beverages

37 Energy shots: birth of a new premium-

priced, high-growth category

ORDERING

38 New Nutrition Business Publications

40 Order Form

Actimel ..............................................3,5,6,11Activ Ossia ...................................................3Activia ..........................................3,7,9,11,16Aldi ........................................................11,13Anlene ..........................................................7Annie’s ........................................................12Benecol .................................................5,9,12Bolthouse Farms .........................................16Café Steamers ............................................12Campbell Soup ................................15,16,17Carrefour....................................................11Clesa .............................................................3Clif Bar ..................................19,20,21,22,23Coca-Cola Minute Maid ..........................5,6Coca-Cola ..................................................10CytoSport ..............................................24,25Danacol ................................................3,4,12Danaten ........................................................4

Danone .............................1,3,4,5,6,8,9,11,12Densia .................................................1,3,4,6Emmi ............................................................8Enviga ........................................................10Essensis ....................................................4,10Fiber One ...................................................16Fonterra .....................................................1,7General Mills .............................................16Gü ..............................................................12GU Energy .......................................18,19,20Hammer Nutrition ...........................18,19,20Imperial Sugar ......................................15,16Kellogg’s .....................................................12Special K ....................................................12LactoTab ......................................................8Latteria Vitepeno .......................................11Libby’s .........................................16,17,26,27Luna ......................................................19,22

Mighty Foodz .............................................25Muscle Milk ..........................................24,25Nestlé .....................................................13,25Odwalla ......................................................16PepsiCo ......................................................12Pom Wonderful ............................................6Pro.activ .......................................................3ProViva ...................................................9,12Quaker .......................................................23Rachel’s ......................................................12Red Bull ..................................................7,10TSG Consumer Partners ...........................25Unilever ........................................................3Vaalia .........................................................13Waitrose......................................................13Yakult ........................................................5,6Yum Brands ................................................11ZBar ...........................................................23

OCTOBER 2009 3


N E W S A N A LY S I S

Continued from front page

dance. Comin appears in the media talking about the importance of women taking care of their bones.

Spain is one of Europe’s most innovative and sophisticated functional food markets and is often used as a test-bed for new ideas, particularly by dairy giant Danone, which, prior to this new launch, has already launched three completely new product concepts in Spain in 2009. Spanish consumers are very health-conscious and willing to experiment, while Spanish manufacturers, working in an intensely competitive environment, have proven themselves to be very willing to innovate and take risks.

Spain is a core market for Danone, which has been established there since the 1920s. Danone tests many new ideas in Spain before rolling them out in other markets (see box on page 4).

The brand has a long association in Spain with healthy dairy and its credibility among Spanish consumers is high. Spain is one of the few countries where Danone’s Activia and Actimel probiotic brands are mass-market and the company has the dominant share of the yoghurt market – a share it defends fiercely. In the cholesterol-lowering yoghurt market, for example, the battle for share between Danone’s Danacol brand and Unilever’s pro.activ brand ended in a humiliating defeat for Unilever and the withdrawal of pro.activ from the market.

COMMENT: DANONE’S MOVE SIGNALS NEW DIRECTION FOR NUTRITION IN EUROPE

The launch of Densia is significant at two levels:

1. It signals the direction that new products will increasingly have to take in a Europe where health claims are highly restricted.

2. It shows that at last someone is taking

seriously the potential of the market for bone health products targeting women over 45, a market which has long been established in Asia but never properly explored in Europe or the US.

With the launch of Densia Danone is seeking to create a new segment of the yoghurt market, delivering a product that meets the need for effective bone protection among women over 45 – a growing market as Europe’s population ages. It’s an opportunity that’s largely untapped in Europe, where there are few good examples of products that deliver an effective dose of ingredients for bone health and no good examples of marketing the bone health benefit.

It’s an opportunity that has been well-developed in Asia by Fonterra, with its market-leading Anlene brand (see Case Study in September 2008 NNB and June 2008 NNB). Anlene has succeeded as a premium

A partir de los 45 años, tus huesos necesitan más calcio cada día (1.200 mg diarios).

Ahora, para que puedas tomar todo el calcio que necesitas, Danone presenta DENSIA, con EL DOBLE DE CALCIO que un yoghourt tradicional y vitamina D para ayudar a mejorar su absorción.

Sólo el 50% de las mujeres toman la

cantidad de calcio recomendada.

Doble de Calcio (400 mg)+

Vitamina D

1.200 mg

barcelonaworld race

¿TUS HUESOS SONTAN FUERTES COMO CREES?

Print advertising for Densia says: Are your bones as strong as you think? Only 50% of women take the recommended amount of calcium. From the age of 45 your bones need more calcium every day (1,200mg). Now, for you to be able to get the calcium you need, Danone presents Densia, with DOUBLE THE CALCIUM of traditional yoghurt and vitamin D to help improve its absorption.

NUTRITION FACTS FOR DENSIA

Ingredients:

Milk, skimmed milk powder, calcium citrate, stabilizer (E1422), lactic fer-ments, vitamin D

Nutrition (per 125g pack):

Energy 305kJ/73kcal (4% RDA)

Protein 5.2g (10% RDA)

Carbohydrate 8.7g (3% RDA)

Of which sugars 7.8g (9% RDA)

Fat 1.9g (3% RDA)

Of which saturated fat 1.2g (6% RDA)

Dietary fibre 0g (0% RDA)

Sodium 0.09g (4% RDA)

Calcium 400mg (50% RDA)

Vitamin D 5µg (100% RDA)

OCTOBER 20094


N E W S A N A LY S I S

Satisfaccion is a new satiety yoghurt, marketed as an extension of the Vitalinea brand, a long-established, low-fat and low-calorie “dieting” brand. Introduced in Spain in the spring of 2009, it provides a dose of 9.2g of protein and 2g of fibre per 100g and is claimed to reduce the desire to eat for two hours following consumption.

Danacol is Danone’s sterol-based cholesterol-lowering brand. Marketed in Spain in 100ml bottles, it has proven to be very successful in the Spanish market and is now marketed Europe-wide, with total brand sales in excess of €250 million ($368 million) per annum. Danacol is today Europe’s single-biggest cholesterol-lowering yoghurt brand.

Danaten, launched in Spain in the summer of 2007, is Danone’s blood pressure-lowering brand. Based on peptides, potassium and magnesium, Danaten carries the claim: Helps to control blood pressure as part of a healthy diet. Sold in a 6-pack of 100ml bottles, Danaten is still on the Spanish market, suggesting that it has met expectations. However, Danone has not yet rolled out the brand anywhere else in Europe, while uncertainty remains about the EU’s restrictive health claims process.

Essensis was Danone’s high-profile experiment with beauty foods. Formulated with green tea, vitamin E, omega-6 from borage and probiotics, Essensis sold in 100ml bottles and as a 110ml spoonable yoghurt. Heavily marketed and well-merchandised, it carried the claim: Nourish your skin from the inside. Also launched in France, the brand was withdrawn in 2008.

SPAIN: AN IMPORTANT TEST MARKET FOR DANONEniche brand, and Densia could create a similar niche in Europe if it is well-marketed.

The Spanish consumer is used to seeing liquid milks marketed for the benefit of added calcium, but there is no brand (to the best of our knowledge) that has gone as far as Densia in terms of level of fortification with calcium and vitamin D nor made such a clear claim about bone density. Certainly there will be no competitor likely to come anywhere near the level of investment that Danone will be able to put into marketing Densia.

Competitor activity in calcium-fortified products has intensified in Spain in recent years (see box) and Danone will find either that consumer awareness of bone health has been raised to the point where it provides a good platform for Densia to grow on, or it will be difficult for consumers to see what one high-dose calcium product offers that others do not. The opportunity for Danone is to use its scientific and marketing know-how in Spain in the same ways that Fonterra has in Europe, developing Densia into the first clinically-proven bone health brand and supporting it with communications that demonstrate the benefit.

As Europe’s restrictive health claims regulation continues to create uncertainty and many companies remain reluctant to innovate in ways that might necessitate a health claim petition (80% of health claims have thus far been rejected by the European Food Safety Authority) Danone’s launch of Densia also signals the new direction many companies may take when bringing new products to market – finding niches which can deliver new benefits based on non-controversial science.

BONE HEALTH BATTLE

Clesa, a Spanish dairy that formerly was part of the ill-starred Parmalat group, introduced its own bone health-specific brand in 2008. Called Activ Ossia, it is thought to have been the first brand on the Spanish market that moved beyond talking about being “with calcium” into a stronger bone health message.

Marketed as the “perfect allies to help you take care of your bones”, Activ Ossia is a probiotic dairy drink that retails in packs of three 170g bottles for around €2.30 ($3.38) per pack. Each 170g bottle provides 90mg of calcium (19% of the RDV) as well as 2.15g of fibre (inulin and pectin). The product has no added vitamin D.

Clesa’s literature describes inulin as “the active ingredient” that “improves the absorption of calcium. Consuming one bottle of Activ Ossia gives 25% of the inulin needed for this absorption”.

OCTOBER 2009 5


E D I T O R I A L

This month is the fifteenth anniversary of New Nutrition Business. We debuted in October 1995, the month before Benecol was launched in Finland and less than a year after the European launch of Yakult and Danone Actimel probiotic dairy drinks. Although the concept of foods with health benefits – functional foods – was already well-established in Asia, these three launches marked the beginning in the West of the rise of food and health as a key strategic issue and they stimulated a remarkable period of innovation in food and health.

These three brands between them have provided the most powerful and durable lessons about how to succeed – and how to avoid failure – in the global nutrition business. They gave birth to the current European functional food market and their influence reached the US where we can see that the lessons from these brands are just as applicable.

At the time our first issue appeared – and for many years following – many people held the expectation that supermarkets would be transformed by a proliferation of products targeting markers of disease – such as elevated blood pressure or elevated cholesterol – with their benefits delivered by

an added ingredient, clinically-proven, and the product bearing a regulator-approved “hard” health claim.

Such brands exist – Benecol is one of them – but what we now know is that medicalised benefits have niche appeal and the successful cholesterol-lowering brands (for example) are the ones that have learnt how to be successful as low volume, high value “expert brands”. But the earliest vision of the functional foods market was never achieved: the US market for cholesterol-lowering sterols is dormant and has witnessed failure after failure; in Europe Unilever gave up marketing its blood pressure-lowering drink after a year; even in Japan, the home of functional foods, where the market is now 20 years old, products to lower cholesterol and blood pressure are niche.

Yet, ironically, heart health has at the same time become an everyday message in the supermarket – not from brands with added sterols or omega-3s, but communicated by a wealth of products talking about their “all-natural” heart-healthfulness, or their content of “heart-healthy antioxidants”. These products range from oats to pomegranate juice to almonds.

“NATURALLY HEALTHY” – THE MOST-COMMON STRATEGY

For all of the focus on the science of novel ingredients, one of the biggest developments has been the rise in marketing of food’s natural and intrinsic health benefits. Increasingly, traditional foods have reinvented themselves as foods for health. This reinvention is behind the rise of superfruits, an idea which was never guessed at in the forecasts of 15 years ago.

The idea of health benefits from natural foods is gaining ground rapidly in ever-more categories, often in ways as unexpected as the rise of superfruit. The emergence of coconut water, for example, a beverage that naturally has as much nutritional power as a formulated sports drink, was never imagined and had anyone suggested it 15 years ago they would have been laughed at. Yet in 2009 both Coca-Cola and Pepsi invested in coconut water brands – Zico and One respectively – while Pepsi also bought Brazilian coconut water supplier Amacoco, which supplies both Zico and One.

SURPRISE AS WELLNESS WINS

Another development that was not anticipated back in 1995 was that energy drinks and products for digestive health would come to be the largest part of the functional food market around the world. If we look at Japan, digestive health products still account – 20 years after the first functional food was launched – for 45% of the total sales of government-approved FOSHU (foods for a specific health use) products and for 25% of the wider functional foods market. Energy drinks account for an even higher percentage – and an energy drink is Japan’s biggest functional brand.

The reason is that people the world over prefer to get benefi ts that they can see or feel. You will never feel your blood pressure or cholesterol going down and so the compelling reason to buy the product again isn’t on your mind.

EUROPE’S SELF-DEFEATING LOVE OF REGULATION

Since 1995 many in the food industry in Europe have been calling long and loud for

Food transformed

Brands that followed the view – commonly held in the late 1990s – that products with health benefits must look just like “regular” products and be priced as close to them as possible have largely failed to deliver lasting success. Coca Cola Minute Maid proved to be an expensive disappointment.

OCTOBER 20096


E D I T O R I A L

an overhaul to health claim regulations and the introduction of a uniform, Europe-wide health claim system. Their argument has been that this was needed to allow products to communicate their benefits and that without it the European industry could not innovate.

It’s a point of view that we have long disagreed with at NNB, given the evidence that European companies have in fact created a wealth of successful, innovative brands (see every issue of NNB for the last 15 years). Rather, the health claims-as-a-problem argument has been used by many companies as an excuse for their failures of strategy and marketing.

Well, Europe now has a health claim system in place which is highly restrictive in nature and looks increasingly as if what it will most probably do is reduce – or even end – food and health innovation in Europe.

Our lead story – the launch of Danone Densia bone health yoghurt in Spain – is a clue as to the direction that innovation in Europe might have to take: Densia meets a growing consumer need for products that support bone health, but it is an example of how in future brands might be forced to offer only simple generic benefits. Success will become a matter of providing the benefits in a more concentrated or convenient way than other brands, coupled with marketing muscle.

BLACK-LISTING BENEFITS As this issue of NNB went to press the European Food Safety Authority (EFSA) was on the verge of publishing its first batch of opinions on 1,000 of 4,000 proposed Article 13.1 health claims. Given that EFSA has rejected 80% of the health claim petitions put before it so far, this announcement (which

we shall look at in detail in our November issue) will be a litmus test for the industry. The biggest fear is that EFSA will continue its negative stance. The evidence for this is compelling – EFSA has in fact already drawn up a black-list of 280 claims which it says are “not fit” for evaluation. Many of them originate with reputable ingredient companies and food manufacturers. But without evaluation by EFSA, they become illegal claims in January 2010.

If EFSA carries on as most people fear, there will be two likely outcomes: one, that Europe will slide from being a leader in health innovation and two, sooner or later the food industry will be forced to mount a legal challenge to the regulation. But given the agonisingly slow processes of the EU, that challenge could spend years in the courts.

And so the new normality will be that small companies will flee from health messages – hardly a benefit to Europe’s consumers – rather than entangle themselves in the nightmare of the health claims system, leaving only a few large companies to innovate in health.

The main winners from the EU’s new health claims regulation will be PR companies, who food manufacturers will turn to for help in finding ways of getting their message into the media without using an overt claim.

GOOD IDEAS COME FROM ASIA

It’s worth reminding ourselves that the origins of many of the most successful functional brands and functional product concepts lie in Asia, where probiotic dairy drinks, energy drinks, enhanced waters and many more have all been long-established. Red Bull, for example, was on the market in Thailand for many years before an Austrian company licensed the concept and grew it into a $5 billion business. The Thai brewing family who created Red Bull still own 50% of the Red Bull business in the West.

Another example of the transformative power of Asian innovations, appropriately translated into Western markets, is the “daily-dose” Yakult-like product packaging concept. When we first launched this publication 15 years ago the first daily-dose packages had just appeared on the European market. No-one should forget how the concept was openly derided by people in industry and consultants alike. Among the criticisms leveled at the idea was that people in the West would “never” accept such a strange

idea, and so on.Today this packaging format has almost

become the standard for all innovative products in the functional fi eld, signaling as it does that this is a “healthy” and “different” product. America was the last place to resist the daily dose concept, but even that has now changed following the explosion of the energy shot market from zero to over $500 million in retail sales in a matter of four years.

DISRUPTIVE INNOVATION – THE MOST SUCCESSFUL STRATEGY

If there is one lesson that can be learned from the last 15 years, it is that products that are as differentiated as possible, creating new segments of existing categories or even completely new categories, very often using strong packaging innovation to signal their difference, and providing new benefits, have proven to be the most successful (see Editorial on page 7). These successful brands usually also command high retail prices.

By contrast, brands that followed the view – commonly held in the late 1990s – that products with health benefits must look just like “regular” products and be priced as close to them as possible have largely failed to deliver lasting success.

Success in the business of food and health is most often about embracing risk rather than trying to avoid it and about creating new consumer demand, rather than waiting for consumer research to tell you what people want. Who dares, wins.

The launch of Danone Densia bone health yoghurt in Spain is a clue as to the direction that innovation in Europe might have to take.

The idea of health benefits from natural foods is gaining ground rapidly in ever-more categories, often in ways as unexpected as the rise of super-fruit (such as Pom Wonderful). The emergence of coconut water (such as Zico above), a beverage that naturally has as much nutritional power as a formulated sports drink, was never imagined and had anyone suggested it 15 years ago they would have been laughed at.

OCTOBER 2009 7


EDITORIAL: SEVEN RULES FOR SUCCESS

Fifteen years of analysis by New Nutrition Business of the successes and the significant failures has led us to draw up a list of seven “golden rules”. Some of you will be familiar with these – and in fact we have published them in our unique report Failures in Functional Foods & Beverages. But we’ve never covered them all at one time in the pages of NNB. Given that this is our fifteenth anniversary issue, this seems like an appropriate time to do it. Our golden rules aren’t a set of rigid must-dos, rather they are designed as a helpful check-list, and they are based on our observation that the most successful brands are those which – in addition to meeting the basic requirements of good taste and convenience – score best on the following criteria:

1. Be an expert brand2. Focus on a relevant benefit, a credible

brand3. Offer the power of a benefit the

consumer can feel4. Remember that an ingredient is not a

point of difference5. Begin by focusing on niches of loyal

consumers and command a premium price

6. Differentiate your product through packaging design

7. Open new categories and segments – don’t be a me-too

RULE 1: BE AN EXPERT BRAND

The past 15 years of functional foods have shown very clearly that the best way to get consumers’ loyalty and generate repeat business is to be “the expert brand”, the brand that’s perceived by the consumer as the most credible source of the health benefit that they are looking for. Marketing is not a battle of products; it’s a battle of perceptions. This means that once a brand has captured and reinforced its position in consumers’ minds, then it’s very difficult to change those minds.

The most successful functional brands are the ones that find a clear expert position and stick to it. Red Bull, for example, “gives you

wings”; Kellogg’s Special K helps you “drop a jeans size” and Danone Activia “helps improve digestive transit time”.

These brands remain strong in their markets because they are dominant in consumers’ minds – a status achieved with a simple, uncompromising and consistent positioning, supported by marketing and consumer education.

Despite recession, in most countries (and there are a few exceptions) the above brands – which typically retail at premiums of 50% and more to comparable products – have continued to grow, even from a strong base, with Activia growing 19% in Italy and Special K growing 17% in Australia.

RULE 2: FOCUS ON A RELEVANT BENEFIT, A CREDIBLE BRAND

Failure to see a product and its benefits through the eyes of the target consumer is one of the most common causes of brand failure.

The benefit needs to be relevant to the target consumers, easy to understand and well communicated, since with the thousands of messages people get every day from

advertising and labels in the supermarket, the more question-marks your product raises and the more people have to think about what your product is offering, the longer it takes them to decide to purchase it and so it becomes easier for them to stick with something they know rather than trying to understand something new. You are, after all, not selling your product in a library but in a war zone – the supermarket.

Your product and your brand must both be credible carriers of the benefit that is being offered and there must be a logic to the whole that the consumer can accept. The idea of fibre-fortified chicken, or omega-3 fortified chicken, will seem illogical to most readers, but these concepts have both been tried in real life (with results you can imagine). Dairy fortified with marine omega-3 is almost as illogical – what, the consumer rightly asks, is fish oil doing in yoghurt? That, they will decide, is not natural. And so they have, which is why most omega-3 fortified dairy products have failed or languish in extreme niches.

Omega-3 oil in fish products, on the other hand, is logical and credible – and gets better sales results.

Seven rules to increase your chances of success

SNAPSHOT: ANLENE – THE BONE HEALTH EXPERT

How do you market a milk brand on the benefit of bone health from added calcium (and other nutrients)? Simple: be the bone health expert. This is the approach taken in Asia by dairy giant Fonterra for its Anlene brand: “The driving belief for the brand is that we are the bone experts,” a Fonterra senior executive said.

Anlene has focused on educating consumers and health professionals alike about the brand’s bone health benefits. It has supported its expertise with a bone-scanning service, involving teams of trained health professionals who visit clinics, supermarkets and shopping malls where they set up bone-scanning machines and offer free bone scans to passers-by.

The reward for this expert focus has been that Anlene has grown into a highly profitable brand with market leadership in value-added milks across Asia – taking a 70% share in Malaysia, for example – and successfully holding off competitors who do not have the same expert focus.

Focus, daring to be “one thing” only, is a key brand success factor. In communications a second message always reduces the importance of the first, particularly in marketing health.

OCTOBER 20098



A current example of a disconnect between benefit, product and brand is the area of foods and beverages for skin and beauty. As the box on page 10 shows, Danone discovered that beauty foods have little or no future in the supermarket with its Essensis brand.

RULE 3: AIM FOR A BENEFIT THE CONSUMER CAN FEEL

One of the biggest marketing advantages a product can have – and the surest way to create loyalty for a brand – is to deliver a benefit that the consumer can quickly see or feel.

Having a benefit that consumers can feel is already the underpinning of many successful brands and it will become even more important in an economic environment in which people are becoming more careful about how they spend their money.

When people can feel the benefit that is being offered to them, they can see that they are getting value-for-money. If they can quickly feel the benefit they can immediately understand why they should buy the product again – and again and again.

The best examples of the power of “feel the benefit” include the energy drink market and the market for products for digestive health, which are the two largest segments of

the functional food and beverage markets in Europe and the US:

• Energy drinks deliver a health benefit – an energy shot – that is immediately effective and detectable. If the 24 year-olds who want to party all night long can feel that benefit they become – as they have done for Red Bull and other energy brands – loyal consumers.

• Products for digestive health have the same advantage. With digestive health you can very quickly find out if a product is effective or not and if it gives you the benefit of better digestive health.

In hard times products without immediate benefits could see sales fall. In Australia, for example, where consumers have the highest awareness in the world of the benefits of omega-3, the two long-established omega-3 milks saw their sales fall by 30% in the year to June 2009.

If they can’t feel the benefit – show it to them

One of the most important lessons of the last decade is that you should try to demonstrate your product’s benefit to make it easier for

the consumer to understand. For example:

• Money-back-if-not-satisfied challenges. Danone pioneered the idea of the “consumer challenge” back in 2002 by offering consumers a full refund if they didn’t “feel the difference” after consuming its probiotic products every day for 14 days.

• Measure the difference: Kellogg Special K Drop a Jeans Size promotions offer women the tangible benefit of “dropping a jeans size” if they follow the Special K eating programme for 14 days.

RULE 4: AN INGREDIENT IS NOT A POINT OF DIFFERENCE

It’s very easy to get carried away at the product development stage with the potential of differentiating your product with a new ingredient, but consumers do not buy products because of their ingredients (unless they are consumers for natural or organic products or “gluten-free” or some other free-from proposition).

Consumers buy products for benefits that are relevant to them (see Rule 2). Just because consumer awareness of an ingredient is high, that doesn’t mean that awareness will translate into sales.

Omega-3, for example, is claimed to have 50% or 60% consumer awareness in many countries, but in reality people will only buy a product if the benefit – either adult heart health or brain development for children – is relevant to them.

Even if a brand gets every other aspect of its design right, using an ingredient that’s unfamiliar to consumers can be a killer concern. Even innovative Swiss dairy group Emmi – a company notable for its many functional food successes – decided to withdraw from the market its LactoTab brand, Europe’s first chilled dairy beverage based on the ingredient Coenzyme Q10 (CoQ10), citing consumer unfamiliarity with the ingredient as one of the main reasons for the product’s failure.

You can invest as much as you like in technology and scientific substantiation, explains brand strategist Peter Wennström, “but if the consumer doesn’t accept your ingredient and doesn’t believe that it is necessary for their lifestyle then your technology is of no use. You must be willing to spend time to educate them about it – or

Using an ingredient that’s unfamiliar to consumers can be a killer concern. Even innovative Swiss dairy group Emmi – a company notable for its many functional food successes – decided to withdraw from the market its LactoTab brand, Europe’s first chilled dairy beverage based on the ingredient Coenzyme Q10 (CoQ10), citing consumer unfamiliarity with the ingredient as one of the main reasons for the product’s failure.

OCTOBER 2009 9



use another ingredient that they do accept”. It’s on such a simple rule of consumer logic that the future of many functional foods and beverages depends.

RULE 5: A FUTURE OF NICHES – TO CREATE MASS MARKET SUCCESS, FIRST KNOW YOUR NICHE

“I thought we’d get the mainstream consumer right out of the gate, but I may have been naïve. It became clear to us that the early-adopter market was extraordinarily strong for us. After zeroing in on the early-adopter market, you build acceptance points so that as the market heats up, you’ve got the opportunity to spread your wings and expand.”

If every food industry CEO was as

realistic and as brutally honest with themselves as Steve Demos, the multi-millionaire food and beverage entrepreneur quoted above, then the industry’s success rate for new products – and renovated old brands – would be much higher than it is.

Demos told New Nutrition Business that this need to focus on the early adopter niche was a key lesson for his company after its first year of marketing an innovative probiotic fruit juice.

He added: “Now our approach will be to go two inches wide and seven miles deep. We will build the maven market and viral acceptance of the product among loyalists who believe in what we’re doing and will talk about it. It’s a different route from what we expected at first.”

Again and again, food and beverage executives convince themselves that they must – to satisfy their need for volume, to meet the expectations of senior management or shareholders or to meet their own preconceptions about how the market should work – target the mass market.

This point of view is mistaken more often than it is right. One of the key lessons of the last 15 years is that companies who try to jump straight into the mass market usually wind up with an expensive failure, or at best a brand that performs short of expectations. The past decade is littered with failures (see our report Failures in Functional Foods & Beverages for examples).

The mass market was reluctant to pay high price premiums for health, even in economic good times, and is more price-sensitive than ever now, while the cost of effective health ingredients means that it is difficult to deliver an effective product at low prices.

Better than aiming a less-than-precise “wellness” message at the mass market, look instead for people for whom health is part of their lifestyle. These people are, at best, only 20%-25% of the population in most countries and tend to be older, 40 or 50-plus – the age when people start to notice the changes that life brings to how they look or feel and also the age when people have not only the motivation but sufficient disposable income to spend on maintaining their health.

Health-conscious niches are the key driver of health brands – in almost every case in every country. For example:

• Esther van Onselen, marketing manager for Benecol Europe at McNeil, told New Nutrition Business that cholesterol-reducing products have evolved into a category that attracts almost exclusively older consumers: “About two thirds of people have elevated cholesterol, and about 35% to 40% of people are motivated to do something about it. If you then look at the active cholesterol-lowering foods category – Benecol, Flora pro.activ and the various private labels out there – the overall penetration is between 18% and 20%. Our spreads are consumed predominantly by people who are over 60. Our yoghurt drinks, launched back in 2003, got people into the fridges who were a bit younger, around 50, 55-plus.” Van Onselen says it has become clear that the cholesterol-lowering market is never going to attract truly ‘young’ consumers. “Cholesterol reduction and being motivated to do something about it is really something that comes onto your radar after the age of 40-45.”

• The ProViva probiotic juice brand, marketed with a digestive health benefit, has become a mass-market success in Sweden, but even after 15 years on the market, the company says: “The brand’s penetration could be higher. Overall penetration is 31% in Sweden. Our consumers are a very loyal but quite a small bunch of people. There is a hard core of 10% of households consuming perhaps 50% of the sales.”

• Danone Activia probiotic yoghurt, the biggest brand of its kind in the world, is something of a niche brand. Activia has rocketed to over $350 million (€238 million) in retail sales in the US in the space of three years, but, as a Danone spokesperson told NNB, the crucial point is that: “It doesn’t have broad penetration among consumers but rather dedicated usage among a narrow slice of consumers – sales are driven by about 5% of consumers.” These narrow slices of consumers have high loyalty and very high repeat purchase rates. For successful health brands 80% repeat purchase is common.

RULE 6: DIFFERENTIATE USING PACKAGING DESIGN

If your product offers a benefit that seems relevant, in a product that consumers believe to be effective, and particularly if you use packaging innovation to add to your point of difference, then you have a good chance of commanding and keeping a higher price

Your product and your brand must both be credible carriers of the benefit that is being offered and there must be a logic that the consumer can accept. The idea of fibre-fortified chicken, or omega-3 fortified chicken will seem illogical to most readers, but these concepts have both been tried in real life.

OCTOBER 200910



point and higher profit margins.Innovative packaging performs several

important functions:• It signals to consumers that “this is

something very different”. • Innovative packaging conceals a price

premium. It is a good way of achieving high margins since consumers have no similar existing products to function as a comparison. Using packaging, companies can create new price points and achieve much higher selling prices for their products.

• If you use packaging innovation to create a new category then you are defining the direction in which many of your competitors must go and you are defining the packaging format they must adopt. You are in effect establishing your credentials as a market leader and innovator.

RULE 7: OPEN NEW CATEGORIES AND SEGMENTS – DON’T BE A ME-TOO

Whether your company is large or small, it faces the challenge of how to use nutritional benefits to carve out a space in what is almost always a well-served and usually fiercely-guarded category.

An article in the Harvard Business Review of May 1, 2007, titled “Strategies to Crack Well-Guarded Markets”, provides some useful insights for food and beverage companies faced with this challenge.

Red Bull, the authors point out, entered the US with a niche product, in innovative and entirely new packaging, priced at twice the price of any regular soft drink and distributed (at first) only through bars and convenience stores. The company did not use advertising blitzes, instead relying on sampling. The reward for this unconventional approach was that Red Bull was able to create a loyal following and a bridgehead from which to build a brand with over $700 million (€520 million) in US retail sales – a 65% market share of the energy drink category.

It’s an unfortunate fact that very often brands did not bring anything new to their category except the brand’s health benefit. And worse, in most cases the health benefit wasn’t truly a point of difference and could be already obtained just as easily, and sometimes more cheaply, from other foods or from dietary supplements. They were “me-too” products.

Creating a new category based around an

innovative product is very rare in the food industry but it is one of the most successful and well-proven strategies in the global market for functional foods.

New category creation depends on the development of a new type of food or drink and a new type of consumption occasion. The new product and the new consumption occasion should contribute to the identification and fostering of a new type of consumer need – one that has not been properly addressed before.

Marketers lean heavily on consumer research to tell them what consumers want

and then try to match brands to those wants. But market research only tells you what people already know – it won’t tell you what consumers don’t yet know they want. New category creation does something quite different from this consumer research-dominated thinking: it creates a totally new proposition and then educates consumers about it. As a result, new demand arises among consumers for something they didn’t know they needed. This has been the basis for some of the world’s most successful brands.

SNAPSHOT: WHAT HAPPENS WHEN A BENEFIT ISN’T CREDIBLE - ESSENSIS

• After a promising launch in France, Belgium, Italy and Spain in early 2007, in which the brand was supported by a significant investment in advertising and merchandising, the Danone Essensis “beauty yoghurt” brand achieved sales around half the target which Danone had said it was hoping for and was withdrawn.

• Danone has a track-record of successfully developing a number of expert brands and it is from its experience that many of the Seven Rules of Success have been developed. But in this case Danone didn’t give enough weight to them.

• “Beauty” and “skin health” from food was a new and unfamiliar benefit to consumers (Rule 2).

• The benefit was not one that you can quickly see or feel (Rule 3).

• The benefit was me-too – in that consumers would have to substitute Essensis for an existing topically-applied skincare product. Skincare products are mostly strong brands and well marketed – and consumers’ willingness to believe in such products is very high.

SNAPSHOT: WHAT HAPPENS WHEN YOU IGNORE THE RULES - ENVIGA

• Coca-Cola’s Enviga “calorie-burning” drink, launched in the US, survived for little more than a year.

• Coca-Cola over-estimated the size of the potential market for the concept of “calorie-burning”, admitting a year after launch that it was more of a niche concept. There’s no harm in serving niches, but it is better to plan for a niche and grow from it than plan to be mass-market from the outset (Rule 5).

• The product did not deliver any benefit you can see or feel – you cannot see or feel calories being burnt (Rule 3).

• It was a problematic proposition because it is counterintuitive and lacks credibility – a carbonated soft drink that burns calories. The idea of a carbonated soft drink that causes you to lose weight is a difficult one for consumers to believe or even understand and certainly the brand was not one credibly associated with weight management (Rule 2).

• No packaging innovation: Enviga looked just like any other carbonated soft drink and thus an opportunity to assert a point of difference was lost (Rule 6).

OCTOBER 2009 11


EDITORIAL: THE NEW CONSUMER

In many countries, there have been some significant shifts in consumer demand in the wake of the global financial crisis. The news that French producers of foie gras have had to cut production by 10% should be no surprise. But a closer look shows that in fact, rather than create new trends, the global financial crisis (or “GFC” as the bankers refer to it) has accelerated the established ones. There have been some surprising success stories even in the depths of economic uncertainty. And where some companies have experienced failures, a look at the laws of food and health marketing shows that those businesses that have encountered problems were often on-track to encountering those problems sooner or later anyway – the financial crisis just made their errors more visible, sooner.

A BOOST FOR PRIVATE LABEL

The development that has most caught the attention of the media is the increase in sales of retailers’ own label products and of sales by discount retailers. In Europe, private label is nothing new and has long been seen by many food and beverage brands as their primary competitive threat. On average, across Europe, private label accounts for 40%-45% of grocery sales. Within Europe, the UK has the world’s highest proportion of private label – in 2008 it accounted for 48.2% of the grocery market by volume and 52.7% by value. In some categories, such as liquid milk, its share is over 80%.

It’s in the US that the surge of interest in private label has come as a shock – but to European industry executives it still looks as if the Americans have it easy, with private label accounting for just 24% of the US market in 2008 (up from 18% in 1999).

In the long run the US, and many other markets, are undoubtedly heading towards a similar level of private label to Europe as supermarket bosses discover the better margins they can make from own label in many categories and the degree of price leverage it gives them. It’s a degree of leverage that’s not good for many food producers and in Europe more than one major food processor has hit financial

problems after making the mistake of setting themselves up to primarily supply private label.

Even markets such as China, where private label is a newish concept, are now on the same road, led by the big European retailers operating there. Carrefour, for example, has introduced 2,000 private label products in China, priced 10%-20% below brands, and they are said to account for 5% of Carrefour’s China sales.

Also seemingly unstoppable is the rise of the “hard discounters”, such as Aldi, whose low-cost model and limited range has helped it grow to be the biggest retailer of its kind in the world. Its home market, where it has an almost 40% share of the grocery market, is Germany, and according to Planet Retail, a retail information firm based in Germany, 90% of what it sells is private label.

A BOOST FOR HEALTH BRANDS

Luckily, price is only one element in consumers’ decision-making. While the percentage of the market that is willing to pay a premium for health benefits is small – usually no more than 20% of consumers in

most countries – it is a loyal group. Moreover, many of those most motivated by health tend to be in groups that are higher-income or older, and therefore less directly affected by fear of unemployment.

In Italy, for example, although the economy shrank by 6% in the year to August 2009 – the worst decline for any major European economy – sales of Danone’s premium-priced Activia digestive health brand actually grew by an impressive 19.5%, to €222.5 million ($325 million), according to IRI, giving it a 38.3% share of a “healthy yoghurts” market valued by IRI at €581.1 million ($849 million). Overall, Danone holds a market share in Italy – one of Europe’s most-contested dairy markets – of 30% by volume and, since its brands are premium, 40% by value.

And it wasn’t necessary to be a global dairy giant to get growth in the Italian market – just strongly differentiated. For example, Latteria Vipiteno – a small farmer-owned producer of organic and specialist yoghurts with a mere 4.1% market share in Italy and none of Danone’s promotional muscle – saw its sales grow 15.4% by value and 11.7% by volume over the same period.

Extreme polarisation: the future of consumer markets after

the financial crisis?

MULTINATIONALS LOOK TO CHINA TO MAINTAIN GROWTH

Yum Brands is the owner of KFC and Pizza Hut. Its Pizza Hut chain is already the number 1 restaurant chain in China where it plans to add 475 more units this year. China is the company’s second-biggest market after the US.

But in the year just ended:• US same-store sales fell 1%, with the Pizza Hut brand

falling 8%. • Same-store sales in China fell 4%.

“China same store sales falling 4% despite large stimulus spending is troubling,” a stock-market analyst was quoted as saying.

Just like consumers in the West, Chinese consumers appear to be eating out less and saving money by eating at home more. As a result, grocery companies are doing well. Kraft Foods reported a 10% sales growth in China and said it expects sales to rise more than 10% in 2009. “This is one of the times when I love being in the food business. This is a market that, whatever happens in the economy, people still eat,” CEO Lorna Davis told Reuters in an interview. Kraft has increased its advertising spend in China by more than 20% in 2009.

OCTOBER 200912



Meanwhile in another depressed economy – the UK, where the economy has shrunk by 5.2%, the worst fall since the 1930s – the overall yoghurt market was static, yet according to Nielsen data in the first quarter of 2009, sales of the Activia brand grew 15.2% and Actimel, a probiotic brand for immunity, grew 9.4%. Activia’s growth was driven by new flavours, of which the most successful was Intensely Creamy, which is now being rolled out to the German and Belgian markets.

Italians’ embrace of food as a way of maintaining health, even in the teeth of economic gales, also benefited the Danone Danacol cholesterol-lowering brand, which

is based on plant sterols. According to IRI, Danacol earned €72.7 million ($106 million) in retail sales in the year to August 2009, a 28.8% increase in value and 25.4% increase in volume, giving it a 12.5% share of the “health yoghurt market”. For a brand that sells at a 100%+ premium, that is quite some achievement. It is a testament to Danone’s years of investment in making Danacol “the expert brand” in cholesterol-lowering – the brand consumers see as being the most credible provider of the cholesterol-lowering benefit.

In the UK, too, the “expert brand” in cholesterol-lowering – Benecol – also did well against the backdrop of recession, growing

its sales by 14% (in the year to June 2009, according to IRI) in a super-premium priced category that grew 4%.

While it would be wrong to generalise from the examples of two countries and say that the same effect has been seen everywhere – it has not, markets in Spain and Ireland have been very weak in the last year – it does seem to be the case that brands that have created consumer trust and credibility have done best, even if premium-priced.

It’s an experience that can be found in many markets. In Sweden, for example, the ProViva digestive health probiotic juice brand still managed to grow sales by 8% in 2009, even though consumers could have switched

STRONG BRANDS, CLEAR BENEFITS, BETTER SALES

Although consumers will look for every possible way to make their pennies stretch further, food is still an affordable indulgence and brands that can be either an affordable alternative to going out, or a valuable part of maintaining your health, will still do well:

Gü chilled indulgent desserts: Priced at £2.95 ($4.69/€3.21) for a pack of two chocolate puddings, it’s an affordable indulgence for people who choose to stay in on a Friday or Saturday night. Gü sales grew 30% in 2009 to £15 million ($30 million/€6.3 million).

Rachel’s, the UK organic yoghurt brand owned by Dean Foods (America’s biggest milk processor), saw its organic yogurt sales grow 18.3% in the first half of 2009 to a 25% share of an organic market which had zero growth in that period. “Organic is only a support to taste and purity. Rachel’s success is based on making high quality, better-tasting, attractive products with an appeal that is more than just the organic label,” said Steve Clarke, marketing director for Rachel’s

Annie’s: Annie’s 2009 growth in the US market was 25% to $100 million (€68.5 million), following the successful launch of Annie’s newest product, Organic Bunny Fruit Snacks. “It’s the most successful new-product launch we’ve ever had,” said Jim Foraker, CEO of Annie’s Homegrown. “In research a lot of parents told us they aren’t buying organic food for themselves, but they’re definitely buying it for their child. That’s something they just won’t compromise on.”

Café Steamers: The 20 year-old Healthy Choice brand, owned by ConAgra, was given a new lease of life with the introduction of a new line of Café Steamers frozen ready meals. The brand employs a microwave-steaming technology – frozen vegetables come out more colourful, tastier and steaming takes less time. It proved an immediate hit despite being premium priced:

• In 2007, first-year sales were $95 million (€65 million)• 2008 sales were $117 million (€80 million)• For the year to June 2009, on track to exceed $125 million (€85.6 million), even as the frozen

ready meal market declined 3.5% in the same period.

Chips: In the US PepsiCo Lay’s brand’s sales in the year to June 2009 grew +11% to $1.1 billion (€0.75 billion). PepsiCo Tostitos tortilla chips grew +19% to $820 million (€561 million), despite selling at a 30% premium over private label and over potato chips. Competing private label tortilla chips grew 7% and still have only a 6% share.

Kellogg’s Special K: The world’s biggest weight-management brand grew its sales in Australia by 17% in 2009, despite being priced at a 80%+ premium to the leading brands of regular cereal.

OCTOBER 2009 13


to 25% cheaper, non-probiotic juice from the same manufacturer. But they did not. The benefit was compelling enough to keep their loyalty.

LOOK TO EUROPE TO SEE THE NEW WORLD

Even if economies revive, the future for many markets might look like what has been normal for Europe for a decade, with consumers choosing to economise on the basic commodities while paying more for brands that provide clear value. Germany, for example, is the home of hard discounters, but as one German food industry executive said to NNB, speaking on condition of anonymity: “German consumers for many years have been able to do two different things at once – they want to pay as little as possible for the basic commodities, shopping around to get five cents off a bag of rice for example, but then they will pay a 200% premium for some special fruit or dairy dessert or special yoghurt.”

This pattern is now becoming more widespread, with consumers demanding lower-priced everyday products but still willing to pay more for something special.

Australia is as far from Germany as you can get, but its retail market has already taken on similar characteristics, with two big retailers fighting viciously on price, determined to allow no room for Aldi, which has opened 70 stores in Australia, to get a toehold, against the backdrop of an economy which grew by just 0.5%. And yet:

• Sales of energy drinks, a long-established market in which they retail at a premium of 200% to regular carbonated drinks such as Coca-Cola, grew by 29%.

• Sales of the leading probiotic yoghurt brand, Vaalia, grew by 16%.

Food producers will increasingly be forced to choose between being a producer of the lowest-cost commodities (and least-cost may be the only way to protect yourself against private label) or a seller of lower volume but higher value-added products.

Some companies will have no choice because their only market position is in the price-sensitive mass-market. As a result of the recession, Nestlé, for example, is to sell its products in smaller, lower-priced packages in the US and in Europe in order to appeal to less affluent consumers, the company's CEO Paul Bulke reportedly said at a conference in London.

"We have already tried this in other countries such as Brazil and in the Philippines where products, such as Maggi and Nescafé, are available to consumers with a smaller income," said Bulke in an interview with Reuters.

Ironically, health may actually lose ground in the mass-market, since adding health ingredients increases costs and risks. Loss of market share as a result of trying too hard to be healthy is not something that many managements can accept. One retailer told NNB that in some markets Nestlé switched its mass-market Maggi noodle brand to being “baked not fried”, with the result that it lost market share as mass-market consumers switched to higher fat but better-tasting fried noodle brands selling at the same price.

Smaller companies, lacking production scale and negotiating muscle, will also have no choice but to take the specialist route – or disappear.

A WORLD OF DIVIDED CONSUMERS

The trend to polarisation of the market – even of individual’s behaviour – can be seen in microcosm in the example of Waitrose, a UK retailer with a reputation for quality products and premium prices.

In 2008 Waitrose’s middle class consumers bought cheap groceries as they looked to tighten their belts. As a result, Aldi saw its UK market share grow by 26% during 2008. Faced with greater price competition Waitrose did what it has never done before and introduced a “value” own-label line called Essentials in late 2008. It was an immediate success, generating £100 million

($159 million/€109 million) in sales for Waitrose in the first three months of 2009 and accounting for 13% of the company’s total sales in the period.

However, once the initial financial panic of late 2008 abated consumers began to view premium foods as an affordable occasional indulgence, even while going without new cars or consumer electronics. As a result, said Michael Hodgson, CEO of Waitrose in an interview in UK trade magazine, The Grocer, the company’s NPD efforts are now mostly connected to premium health and indulgence: “Essentials has played a role at the bottom end, but most of our growth is coming at the top end.”

Waitrose’s market share actually grew 10.2% in the 12 weeks to August 9 2009, well ahead of the grocery sector average of 5.6%, according to TNS Worldpanel data. Aldi’s share was up just 8.1%. Overall Waitrose market share is now 3.9%, compared to 3.7% in 2008, while Aldi edged up to 3% from 2.9%.

CONCLUSION: NO ROOM IN THE MIDDLE

As consumers divide more markedly into the low and high end of the market manufacturers will have to make the same choices. Many companies will start to focus on value brands, some will focus on lower volume but higher value health or indulgence brands. But the middle – any company that tries to be both instead of one or the other – will squeezed. Only strong brands with a clear point of difference from private label will thrive.


SUMMARY

1. Private label growth accelerates its long-term growth trend in many markets to address shopper demand for lower priced groceries.

2. One day private label may have 45% share everywhere – but consumers will still choose strong brands.

3. Markets are polarising, individual behaviour is polarising, with consumers looking to save a few cents on commodities but willing to pay more for brands with a strong identity that bring a clear and tangible health benefit – or provide an affordable indulgence.

4. Companies will also increasingly polarise between those focused on high volume and least cost – which may mean putting health second to cost – and those able to make good margins on low volumes, based on their brand and benefit strategy.

5. The recessionary environment brings opportunities: to take share from food service (it’s cheaper to eat-out at home); to build up strong brands with clear points of difference; even to earn premium prices.

OCTOBER 200914


EDITORIAL: INNOVATION

Winston Churchill did not doubt that we can learn from the past. “Those that fail to learn from history,” said Churchill, “are doomed to repeat it.” While history does not provide all the answers, it is a rich seam of human experience from which we can find examples and cases that throw light on today. The history of coffee, for example, helps us understand why and how people adopt new products.

For most of human history coffee was unknown outside a small region of Ethiopia and has been consumed in Europe only in the last four centuries. There is no coffee in the Torah, the Bible or the Koran; there is no coffee in Shakespeare or Dante. Coffee gained its first foothold in the Arab world where it was called “coffa”, derived from the Arabic word for the berries from which it was made.

As late as 1550 in Istanbul coffee-drinking was considered something of an innovation and it wasn’t until 1650 that the first coffee house in the Western world opened, in London, with the second in The Hague, the Dutch capital city, in 1664 and the first in America in Boston in 1690.

To a society with no habit of drinking hot beverages – people drank mostly beer, wine or water and tea got its foothold in the West much later than coffee – coffee was baffling and aroused suspicion. Coffee was an exotic unknown with an unsavoury appearance and an unfamiliar bitter flavour that some people said tasted “like boiled soot” or “shreds of burned leather”.

In the seventeenth century there was no GRAS or Novel Foods process to delay coffee’s entry into the market, although in London the College of Physicians was asked to examine “whether Coffee, that came from Turky, and such other new-fangled drinks, will agree with the Constitutions of our English bodies.” Their findings are not known, but certainly they did nothing to stop its rising popularity.

The pleasing aspect of drinking coffee was that it did not make you drunk – remember

many people at that time began their day with beer at breakfast – and in fact it made you feel brighter and more attentive. Employers noticed that the coffee habit made their workers more sober and industrious workers.

Not everyone liked the taste of coffee, so if they could afford it they sweetened it with sugar. Thus coffee became the direct ancestor of Red Bull, a sweetened, caffeinated beverage that people drank to stimulate their mind and body.

People got into the habit of drinking it and poets praised the stimulating effect of coffee on the creative mind. Though it became clear to early scientists that coffee’s effects on sleep and wakefulness were its most compelling benefits, it wasn’t until 1819 that the active component in coffee was isolated by German chemist Runge (working at the request of Goethe, the great German poet).

DISRUPTIVE INNOVATION FROM HISTORY

The story of coffee is the story of all true innovations. It is a perfect example of a “disruptive innovation” – a term coined by Harvard Business School researcher Clayton M. Christensen, back in 1995. A disruptive innovation is a product that overturns the existing status quo in a market or creates new markets.

The greatest successes in the business of food and health are those which have been disruptive – product concepts that were new to the consumer and which have created new categories by creating new demand.

Consumer researchers make great claims for their ability to identify and predict what consumers want, but in reality consumer research only tells you what consumers want today. It has consistently failed to predict what consumers are going to want in the future. It cannot tell you what they do not know. If you base your business decisions only – even primarily – on what consumer research supports, you will never innovate and you will usually fail. Coffee, introduced

today, would have failed in consumer research.

A few years ago, American dairy industry executives used to insist that market research showed that you couldn’t market probiotics easily to Americans or talk to them about digestive health – until Danone proved them all wrong and created a $300 million business inside three years with Activia probiotic yoghurt and its “speeds digestive transit message”.

INNOVATION NEEDS IMAGINATION

It is because of a timid over-reliance on doing consumer research and a desire to tweak what we already do today that our industry’s new product failure rate is over 80%.

Innovation is about bringing to people products that they cannot yet imagine and introducing them in the right way and building the market slowly.

To succeed you must begin with the early adopters, the small group of people who – like the earliest coffee drinkers, sipping their strange bitter black drink – are willing to try something new if the benefit offered is what they need. These people are not only willing to adopt the new, they actively seek it.

The early adopters have been the nursery for all the great food and health successes of the past 15 years. When Yakult probiotic daily dose drinks were first introduced in Europe in 1995 there were people in the industry who mocked the daily dose concept as “too Asian” – and yet today daily is one of the defining packaging formats of our industry and probiotics are a multi-billion dollar business.

Green tea was dismissed as an idea in the West in the 1980s – yet today it’s the trendiest of ingredients. And looking beyond health, the streets of our cities are full of restaurants offering the cuisines of Japan, China India, Vietnam and a dozen other places – a sight that would have been unbelievable when our parents were children.

What coffee tells us about innovation

OCTOBER 2009 15


C O N S U M E R C A S E S T U D Y

Americans are in a consumption funk, cutting their food and beverage outlays just as they’re forswearing cars and mortgages. Some students of the US marketplace believe that current trends will actually lead to a long-term retrenchment in food purchases as well. But at the same time, US consumers are showing every sign that making healthy choices is one area where they are unwilling to compromise.

“Last summer, consumers were experiencing frustration over rising prices, particularly gasoline, and they were having to stretch budgets and do some things that were impinging on their quality of life,” Charles Vila, vice president of consumer and customer insights for Campbell Soup, told New Nutrition Business.

“But by the end of the year, this turned to fear,” he said. “There was fear about their ability to support their families and continue

their livelihoods in ways that they had gotten accustomed to – or even in a trade-down from that.”

And in the process, he added, “The 90 percent of Americans who are still employed have begun to behave as if they’re in the 10 percent who are unemployed. We haven’t seen that kind of behaviour before. Their purchase patterns of discretionary items, how they entertain themselves and manage their finances – that has all radically changed.”

Yet, noted Chris Shanahan, an analyst for market research firm Frost & Sullivan, “It’s food. People have to buy it. And it’s a relatively small part of the budget. So while we’re seeing changes in consumption habits within it, for the industry as a whole, sales haven’t been impacted very much.”

For American food manufacturers, many challenges and opportunities alike are arising in the wake of the financial crisis, which has pushed the unemployment rate to 9.7% and saw up to a million families lose their homes last year.

The biggest challenge also is the simplest: Americans have substantially cut back on their food purchases, fairly across the board, and have begun to adopt new, leaner habits.

That reflects rising unemployment, greater fear of joblessness, and far more saving by formerly spendthrift Americans. The national savings rate already has jumped to almost 7% of after-tax income from 0% in 2007, and it is still going up. Every dollar of that amount, of course, comes straight out of consumption.

For those reasons, about 60% of Americans who make $55,000 a year and less, according to Information Resources Inc. (IRI) – the heart of the US middle and working classes – “are struggling to put food on the table.” This includes purchasing and preparing so much less food overall that there are 37% fewer leftovers in the refrigerators than a year ago, said the Chicago-based market-research firm.

THE NEW FRUGALITY

Consumers now are “absolutely managing to a budget more tightly than they ever have before,” said Campbell’s Vila. “So they’re buying only to consume” rather than to stock up, even if great deals can be had for buying in quantity.

For Campbell, one result was US shoppers’ tepid reception for a recent pricing special in which retailers offered 10 cans of the company’s traditional canned soups for just $10. “People aren’t spending $10 to get any one item no matter how good a deal it is,” Vila said. “They aren’t able to stockpile.”

Imperial Sugar has noticed that consumers are cutting the package sizes of their purchases. That has meant a big reduction in the company’s sales of 4-, 5- and 10-pound (64oz/80oz/160oz) packages and nearly three times the previous level of sales of 1- and 2-pound (16oz/32oz) packages.

“They’re willing to go to the store more

American consumers embrace new habits

The effects of the economic downturn have hit American consumers harder than in most countries, with unemployment soaring to nearly 10% and up to a million families losing their homes. The result is changes in the way people shop. Encouragingly, sales of many brands with a strong health and nutrition platform have so far been untouched and a few have even produced surprising levels of growth. By DALE BUSS and JULIAN MELLENTIN.

Despite recession, “committed” organic consumers – the 20% of organic consumers who account for 80% of organic sales – have increased their purchases by 13% this year. Imperial Sugar has seen a 20% increase in 2009 in US sales of its organic Wholesome Sweeteners sugar brand. “Because of a strong emotional attachment and commitment to healthier food by organic consumers they appear to prefer to give up other discretionary expenses, ” says John Sheptor, CEO, Imperial Sugar.

With its specifi c digestive health message and benefi t that can be experienced by the consumer, Activia has continued to grow faster than the yoghurt market – despite retailing at a 200% premium to the average yoghurt.

OCTOBER 200916



frequently and spend a minimum amount of cash there now,” Imperial CEO John Sheptor told New Nutrition Business. “It’s like they became sensitive to the working capital in their pantries.”

Several brand and industry research executives said that American consumers are demonstrating a new willingness to sacrifice convenience if it costs them and to meet their food and beverage needs in other ways. However, this effect is hitting some categories, but not others.

Those affected include soup, with the market’s overall sales down 3%, measured by volume. Sales of Campbell’s microwaveable Classic Bowl soups and its Soup at Hand varieties are two that have fallen, as more consumers have hesitated to pay their high price points. Sales of Soup at Hand fell 17%, to $63 million (€43 million) in the period January-June 2009 in supermarket outlets measured by IRI. Frozen dinners have been hit, too, with sales down 6% by volume and 3% by value.

PERMANENT CHANGE?

Thom Blischock, president of IRI Consulting and Innovation, an arm of IRI, predicted that such trends will prevail in the industry “for four to eight years, and will develop a conservative new shopper who at the end of that period consumes 6 to 10% less than they did entering the recession. People are feeling good about being able to save money and downsizing, and not wasting.”

One telling sign, Blischock said, is that recent IRI focus groups with millennials – the youngest cohort of adults – revealed that “expensive is no longer cool. Frugality is in. That’s a seismic shift”.

BETTER FOR YOU STILL SELLS

Despite economizing in many areas, American consumers have acquired a desire to eat better that (so far) seems to be outlasting their economic woes. About 67% of respondents in a ConAgra survey strongly agreed that they try to prepare healthy meals, up 10% from an identical survey in January. And 48% said that nothing prevents them from eating healthy foods, up from 38% in January.

“Consumers aren’t willing to trade out of health-and-wellness options,” said Campbell’s Vila. “They want delicious-tasting foods that offer them the health and wellness benefits that they happen to be looking for.” That,

he said, is why Campbell’s Healthy Request and Select Harvest varieties in particular are selling better these days, and why Campbell just launched “light” versions of the first five of its Condensed soups.

Executives at smoothie and pure juice businesses have been dismayed by the slowdown in their once-meteoric category. However, what would look like a problem in some categories would be regarded as a success in others. Relatively speaking the smoothie business is doing well – overall category sales were still up an impressive 7% by value, and 3% by volume in the 52 weeks to June 2009, according to IRI data. That’s all the more impressive when you consider that the smoothie and pure juice category’s average retail price equates to almost $7 (€4.80) per litre – a hefty 100% premium over even premium juice brands such as Tropicana.

This increase in volume and value is either because of or despite a price war in the category sparked by Bolthouse Farms, which recently caught up with long-time No. 1 brand Odwalla in market share, largely on the basis of aggressive price discounting. “We think they’ll get some short-term gains,” Chris Brandt, Odwalla’s vice president of marketing said. Whether Bolthouse can sustain its low prices – given the high cost of raw materials in the smoothie business – is something industry observers question.

KEEPING BRANDS STRONG

Brands need to continue to market just to maintain top-of-mind status. Brandt believes that’s what will help Odwalla snap back in a recovery. “We think our brand and product is strong enough to weather the storm,” he said.

Imperial’s Sheptor said, “When the recession weakens and we return to a more normal economy, we expect that consumers will return to their previous branding preferences. Consumers aren’t so likely in that case to make a deliberate choice to stick with a private label, for example, versus “a brand they’ve had a relationship with for a decade.”

General Mills is among companies that believe strongly in backing up their brands with marketing support even while they’re under assault these days. The Minneapolis-based giant has said it plans to boost overall advertising expenditures this year by high-single-digit percentages, after already increasing spending by 25% in the spring.

Strong brands have in fact held up well

despite the recession. And strong brands targeting improved digestive health have done particularly well:

General Mills’ Fiber One breakfast cereal grew, despite recession, by an impressive 20% in the year to May 2009 (in a category with 2% growth), to achieve total sales of over $225.28 million (€31.3 million), according to supermarket scanning Information Resources Inc., which doesn’t include Wal-Mart (add back likely Wal-Mart sales and it’s a $280 million/€200 million brand). What makes the achievement all the more impressive is that Fiber One products grew between four times and 10 times the rate of growth of most of the categories in which the brand competes and achieved this result despite selling at a 50%-80% premium over competing brands.

Danone Activia probiotic yoghurt slowed down from the meteoric growth rate it has maintained since its launch in 2006, but still achieved growth of 8% by value in a category that grew 3%, to total sales of $355 million (€240 million) in the year to August 2009, according to IRI. Activia thus maintained its lead as America’s biggest probiotic yoghurt brand – and even more impressively did so despite selling at a 200% price premium, compared to the average yoghurt, according to IRI data.

LOYAL ORGANIC CONSUMERS SUSTAIN SECTOR’S GROWTH

Committed organic consumers – those in the top 20% of organic purchasing – increased their purchases of such fare by 13% last year, according to Spins, a Chicago-based firm that researches the natural products industry. Almost perversely, added Packaged Facts, the most likely Americans to be shopping for organic and natural foods are “premium” – upscale – consumers who have taken a significant financial hit recently.

Imperial Sugar, for example, has seen a 20% gain so far in 2009 in sales of its organic Wholesome Sweeteners sugar brand even though sales of its private label organic sugars have declined. Because of a “strong emotional attachment and commitment to healthier food,” Sheptor explained, organic consumers “appear to prefer to give up other discretionary expenses” rather than branded organic fare.

For Libby’s, the Gourmet line of canned vegetables, which are priced 20 to 30 cents

OCTOBER 2009 17



(€0.14-€0.20) more per can than its regular line, “aren’t doing that great because of the economy,” Wolcott said. Yet Libby’s Organics line – priced 40 to 50 cents (€0.27-€0.34) a can higher than standard cut green beans – is doing better on a relative basis “because some consumers just want that choice.”

But “fickle” organic consumers as defined by Spins, comprising about 55% of the organic marketplace, cut their organic purchases by about 2% last year. And organic brands still face the reality that growth has been hampered, at least among the least-committed organic consumers.

Organic consumption is “relatively saturated,” Frost & Sullivan’s Shanahan asserted. “The target market isn’t growing as fast as it once was. And the definition of ‘organics’ is still a problem – a lot of people still don’t understand what they’re getting with ‘organic’ relative to, say, ‘all-natural’.”

PRIVATE LABEL PROGRESSES FASTER

Private labels have been burgeoning for several years now, but the recession is spurring a new round of growth.

About 24% of all foods and beverages served in US homes last year were store brands, up from 18% in 1999, according to NPD Group. Yet in just the last six months, 59% of respondents said they’ve switched to store brands of food products to some degree, according to an online survey by Epsilon Targeting.

Nearly 80% of consumers had “positive attitudes” toward private-label products last year compared with 73% in 2007, according to IRI. And about 80% now are “sold” on private-label quality.

Better-for-you products appear to represent a particularly promising arena within private labels in general. For example, Safeway supermarkets, the fourth-largest US retailer by sales, said recently that it plans to market O Organics and Eating Right lines of private-label goods to more retailers at home and abroad. The California-based chain said that the two lines now will be sold at some ShopRite stores in South Africa and some Exito supermarkets in Colombia. That’s in addition to the seven countries that already sell the lines, including Taiwan and Mexico.

And Cott, the Toronto-based private-label giant, said that it may try to extend its Bare All brand of beverages free of artificial ingredients – first launched exclusively at Tesco’s supermarkets in the UK – to other countries.

DINING AT HOME (CONVENIENTLY)

Of course, restaurants are the brands suffering most as the convenience imperative fades in US households and more Americans simply eat at home. About 73% of respondents “strongly” agreed that eating at home can save a lot of money, up 6% from January, in a comparison of surveys conducted by ConAgra Foods.

About 90% “strongly” or “somewhat” agreed that home-fixed meals tend to be healthier than restaurant fare, up 3 percentage points. And only 33% believed that eating out is worth it anyway, compared with 40% in January.

Restaurant chains are trying to fight back. Chili’s Grill & Bar chain, for instance, just announced a new promotion offering a three-course meal for two for only $20. Luby’s Cafeterias has cut prices on more than 100 items, in many cases by more than $1.

And McDonald’s value meal has been so successful that rival Burger King is still attempting to figure out how to match it after franchise operators voted down the Miami-based chain management’s proposal to sell its double cheeseburger for $1 apiece in the US.

Many brands are boosting marketing around the notion that they lend themselves to convenient preparation of wholesome meals at home.

Campbell, for instance, is emphasizing “soups you can cook with” such as its classic Cream of Mushroom, Cream of Chicken, and Tomato flavours, including the distribution of brochures online and in stores featuring recipes for under-$10 meals. Libby’s

has a GetBacktotheTable.com web site with much the same aim.

LESS IS MORE

Over-assortments of products now afflict many brands and segments after decades of product proliferation. “Shoppers are telling us that categories are too complex,” IRI’s Blischok said. Instead, he said, consumers are looking for brands and retailers to provide them with a smaller selection of choices per segment – just some “good” products and values, some “better” and some “best”.

Sizes, flavours and line extensions that haven’t created incremental sales are the most vulnerable, according to Willard Bishop, the retail consulting firm, as are suppliers with “me-too” products in one or two convenience categories.

Some retail chains have become big winners by adopting this philosophy early on and sticking with it until now. Limited-assortment food retailers such as Trader Joe’s and Save-A-Lot – which offer store-label products at prices up to 40% below those of national brands sold at traditional supermarkets – are the fastest-growing food-retailing format in the US, with 14% growth last year, according to Willard Bishop.

THE RETURN OF BASIC VALUE

Manufacturers will “absolutely have to convince shoppers why their product is affordable, better for them and should be in their market basket,” Blischock said. That’s because there has been a “lasting” shift in shoppers toward a “lens of affordability’ for each purchase.

That kind of oversight may change as the long-term outlook for Americans’ food and beverage purchases likely will continue in its sober vein, especially as the US unemployment rate continues to climb and any stirrings of recovery remain minor.

“Collective [financial] threats will delay an economic recovery by inhibiting consumer spending, increasing precautionary savings, and delaying retirement dates across all levels of the economy,” said a new report by Arjun Chakravarti, a consulting economist for Technomic, a Chicago-based consultant to the restaurant industry.

Campbell’s Vila said that “the severity and swiftness of the changes in the economy have forced consumers to right-size their lives in very foundational ways. And that will linger through this recession and beyond.”

Libby’s Gourmet line of canned vegetables, which is priced 20 to 30 cents (€0.14-€0.20) more per can than its regular line, “aren’t doing that great because of the economy.” Yet Libby’s Organics line – priced 40 to 50 cents (€0.27-€0.34) a can higher than standard vegetables – is doing better on a relative basis “because some consumers just want that choice.”

OCTOBER 200918


S P O RT S N U T R I T I O N C A S E S T U D Y

Manufacturers and retailers are certainly bullish on the new delivery systems that are attracting the attention of a broader sports enthusiast and making up for softening sales in energy drinks and bars.

Although it is difficult to find specific data on these products, Nutrition Business Journal estimates sales of powders and formulas for sports nutrition products at about $2.2 billion (€1.53 billion) in 2007, an increase of 7.9%. Nielsen data shows convenience-store sales of liquid vitamins, supplements, and shots up 155% between July 2008-09. Energy gels and the newest creation, chews, are creating part of that growth.

A few products are even jumping from the sports-performance niche to a more general weekend-warrior audience. But those watching the category don’t see it morphing into something with a broader appeal, as 5-Hour Energy did in the shot category. That may be a good thing. As in other sports categories, product-specific science on gels is minimal, and industry experts acknowledge that new users might not understand the concept well enough to use the products judiciously.

A LOYAL FOLLOWING

Traditionally geared to endurance athletes, such as runners, cyclists, and triathletes, the basic premise of gels and chews is to provide the body with a carbohydrate source to produce energy, explained Steve Born, senior technical advisor and “fueling expert” for Whitefish, Montana-based Hammer Nutrition. Gels make up about 60% of their business. “Gels are easy to digest and convert to energy, so that the body doesn’t spend time or energy digesting solid food,” explains Born.

They do this by providing energy from fast-acting (“within minutes” for GU Energy Gel, for example), easy-to-digest formulations of simple and complex carbohydrates, amino acids, vitamins and minerals, caffeine and other specialty ingredients that reportedly delay muscle fatigue, raise blood sugar levels and enhance sports performance. At the same time, they also tout a mental boost that makes performing the physical activity easier.

Though they sound high tech, in actuality, gels are not a particularly new idea. Products in gel form geared toward elite athletes have been around for at least 15 years, but by some accounts, the first gels appeared on the market in the mid 80s, when endurance

experts in South Africa introduced Leppin Squeezy. In the US market, most category experts attribute GU Energy Labs with the first gel, launched in 1994. The formula was developed by William Vaughn, one of the original formulators for sports-nutrition giant Power Bar, now a Nestlé company. According to Johnson, Vaughn developed the gel for his daughter, Laura, an ultra-marathoner, who was having stomach discomfort and cramping during races. Vaughn worked to develop a formulation that offered the nutritional value of nuts and grains without the complexity of these proteins. Vaughn formed GU Energy in Berkeley, California, to launch the idea.

NEW CHEWS

In the last year, candy-like semi-solid chews have also emerged on the scene to cater to athletes who don’t like the taste and consistency of gels – though they may take a bit longer than gels to deliver their boost (GU Chomps take 10-15 minutes). Most key players in the segment have introduced a chew version, saying they are designed to provide the same function as gels, while also addressing an athlete’s craving for solid food during training or racing and providing even greater convenience than gels. Either delivery system is designed to avoid the dreaded “bonk”, the energy crash that results when muscles cramp and glycogen is depleted.

Though there may be some of the newer chew products that would be appropriate for broad use, many are not, according to Douglas Kalman, PhD, RD, CCRC, FACN, director of business development for Miami Research Associates, which specializes in sports nutrition research. Most chews and gels, he explained, are geared for athletes who exercise 30-60 minutes daily. “So if you are Joe officer worker sitting at a computer all day, this is not really any different than eating candy.”

Christian Johnson, VP of sales and marketing for GU Energy Labs, says that the products can be beneficial for weekend-

Chews and gels boost energyEnergy is the buzz word in sports nutrition for the early 21st century. We all want more of it, whether we are an ultra-marathoner, a soccer mom or an office manager. So it is no surprise that products claiming to energize us are a hot commodity these days. The overall energy category is dominated by drinks and shots, but there is now a host of other concoctions including gels, and most recently chews, that also purport to boost energy and mental performance. KAREN RATERMAN reports.

OCTOBER 2009 19



warrior types, who are a large percentage of their customer base. “It mitigates the downside of a weekend workout and the lengthy recovery. But if you have zero fitness, it won’t give you that. It’s not a proxy for conditioning.”

Kalman doesn’t see the category expanding much beyond the endurance-sport niche. “I don’t see it shifting to a mass audience. It’s really not appropriate. Plus, have you seen the portable yoghurt concept taking off ? It is the same kind of packaging, but you are not seeing kids walking around slurping yoghurt.”

WIDER APPEAL

That may be true, but the products are basking in the current allure of endurance sports. For example, GU Energy Labs has seen an increase in their core demographic of runners, cyclists and triathletes. Johnson attributes the growth to what he calls the “Lance Armstrong effect”. Armstrong’s popularity and the economy has pushed more people to cost-effective sports, such as marathons and cycling. “Now, we also have a new generation of kids, whose parents are endurance athletes, and they understand the nutritional component of sports, beyond just hydration. They are much more aware of these tools, and they are teaching their kids to use them,” he said.

Johnson added that GU has also seen a progression of new customers to include more general sports athletes, such as outdoor campers, golfers and players in team sports, like basketball and lacrosse. The increasing interest, Johnson said, is boosting sales in the general sporting goods retail category, where, he noted, their products “have seen a meaningful uptick in the last 18 months”.

Clif Bar has also noticed the trend and expanded distribution of its Clif Shot line of products, according to brand manager Chris Randall. Clif Shot gel, chews and drinks, and Luna Sport Moons Energy Chews (geared for women athletes) are sold primarily in sports specialty retail stores, such as bike and running shops, sporting goods stores and through online retailers, such as amazon.com, drugstore.com and sports specialty websites. Randall said they expanded distribution to natural food and select grocery stores. “This is in response to growing demand for gels and chews by more types of athletes, and to a desire for one-stop shopping for all kinds of food and nutrition products.”

CONVENIENCE IS KING

A major reason that gels and chews are gaining popularity is their convenience for athletes on the move. Gels are available in a powder form that can be mixed with water, starch or tapioca to create the syrup-like gel and put into a reusable flask, and more recently, manufacturers have been producing them in single-serving packets that athletes can easily carry in a pocket during a race or workout. They range from 70 to 400 calories, contain from 23 to 100 grams of total carbohydrate, and some mix of electrolytes to restore balance. Most carry a suggested retail price ranging from $1.09 (€0.76) on the low end to $2.50 (€1.75) on the high end.

Chews typically contain a similar mix of carbohydrates, sugars and electrolytes; they range from 90 to 130 calories per serving (which is likely more than one chew), and contain around 23 grams total carbs. Some have caffeine and some don’t. They retail from $1.59 (€1.11) to $2.20 (€1.54) per packet, which usually contains two servings.

CARBOHYDRATE CONFUSION

Though there are exceptions, most of the gels and chews are pretty similar on the surface (see sidebar on specific product attributes on page 20). Some companies do tout specific ingredients ranging from antioxidants to higher levels of caffeine, amino acids, histidine or citrates. Though there may be some independent research addressing the effects of these ingredients, there are few companies with peer reviewed, product-specific studies to back up what the extra ingredients do, according to Kalman. “What I would really love to see is companies do product-specific science that supports their marketing claims.” Though he acknowledged that a return on research investment is a

difficult, long-term proposition, “every product should have studies. It increases value and becomes part of their intellectual property”.

Most companies do cite prevailing scientific consensus on the ingredients in their formulas. GU, for example, references studies, one of which shows the buffering capacity of histidine in its Roctane gel, which Johnson says is for “hardcore, elite athletes”. The product has also been tested on company-sponsored athletes for seven to eight years. Clif Bar cites a proprietary study that looked at the effects of gels on blood sugar levels. Randall said the test showed that Clif Shots gels boosted blood sugar within five to 10 minutes.

Opinions differ most on the best source of carbohydrate to use. Hammer’s Born noted that prevailing industry research touts a Dutch study on male cyclists, which found that using a specific ratio of complex and simple carbohydrate sources produced more energy per minute versus using a single carbohydrate source. Though the studies were well-designed, meticulously done, and the results indisputable, Born maintains that duration of exercise was not long enough to be comparable to an endurance sport and the intensity was minimal—more like a recovery pace. “At that pace or low rate, the body can digest anything,” he said. “When you increase the exertion rate, the body has a difficult time digesting. So the findings were not applicable to a real life athlete with a 70-80% maximum heart rate.

“All things being equal,” he said, “we still feel that in a situation of great exertion, complex carbs from maltodextrin allow for a greater value of absorption.”

Absorption rate is an important factor for athletes as they use the gels and chews, because it is not always easy to know how many calories you are burning and how many servings to take. For example, if an

athlete takes too many servings per hour, it can cause bloating. If they take too few they “bonk”. Born advocates a cautionary approach to dosage. “I would rather err on the too light side than have too many gels in my system,” he said. Though dosage does greatly depend on a person’s

size, he added that too much of these ingredients could increase heart

rate or act as a diuretic, neither of which is good at high exertion.

Because absorption is such an issue, product developers are looking

OCTOBER 200920



for more efficient carb sources. GenR8 recently launched Vitargo S2, which specifically addresses absorption and may be a next generation for the category. The product contains a starch extract made from a patented carbohydrate molecule. According to Anthony Almada, a principal with the company and president and chief science officer for sports nutrition think-tank IMAGINutrition, specific studies on the product at the Karolinska Institute in Stockholm measured the absorption rate and showed it was digested 2.3 times faster when compared to carbohydrates used in other energy products. Though it is only currently available in powder form, it can be mixed with tapioca to make a gel, and put in a reusable flask.

When all is said and done, choice of an energy gel or chew often comes down to personal preference. That’s why manufacturers and marketers say taking them directly to the user is the best way to market. For Hammer Nutrition, that means sponsoring 2,400 sporting events annually. “By and large, that is how we reach new clients,” Born stated. At triathlons or cycling races, Hammer generally offers participants the opportunity to sample all of its nine flavours and provides literature to give them information they need to make an informed choice about the products. “This way, they are not going on blind faith, they have a tangible sample to try and decide whether it’s a product they want to use or not.”

Athlete reviews on websites, like Beginner Triathlete and Endurance World, note that users need to read product labels carefully, and avoid ingredients they don’t want, like artificial sweeteners and caffeine. No matter which product, users should also wash them down with water, not only for hydration but to speed absorption and to wash down the sugary, acidic mixtures, which will help prevent tooth issues.

Packaging is another distinguishing factor between products. Some critics of the gel packs voice concern about the environmental impact of packages left behind on trails after races, especially in sensitive areas. Clif Bar addressed this with their patented Litter Leash design that keeps the torn off tops of gel packets attached after they’re opened to facilitate proper disposal. Others feel that the traditional reusable flasks are more environmentally conscious. While the leash packaging solves part of the problem, GU’s Johnson notes that often entire packages are left on the trail.

PRODUCT ATTRIBUTES

GU Roctane Ultra Endurance: tested on sponsored elite athletes for seven years. Uses an amino acid complex – Ornithine Alpha-Ketaglutarate (OKG) – and higher histidine, citrates and branched chain amino acids. Touts improved muscle buffering, less lactic acid build up and more efficient energy production.Calories: 100Total Carbohydrates: 25g from maltodextrin, fructoseAmino Acids: 1200mgSugar: 5gElectrolytes: sodium (125mg) potassium (55mg) calcium (20mg)Caffeine: 35mgAntioxidants: none GU Energy Gel: original GU formula with vitamin C and E, chamomile, ginseng and cola nutCalories: 100Total Carbohydrates: 25g from maltodextrin, fructoseAmino Acids: 450mgSugar: 5gElectrolytes: sodium (55mg) potassium (45mg) calcium (20mg)Caffeine: 20mgAntioxidant: vitamins C, E

GU Chomps energy chewsCalories: 90Total Carbohydrates: 23g from tapioca syrup, cane sugar and maltodextrinAmino Acids: 450mgSugar: 11gElectrolytes: sodium (55mg), potassium (40mg)Caffeine: 20mgAntioxidant: vitamins C, E

PowerBar Gel Blasts chews: touts C2MAX, a blend of glucose and fructose sources that speeds delivery of energy to working muscles.Calories: 110Total Carbohydrates: 27g from maltodextrin, fructoseAmino Acids: 0mgSugar: 10gElectrolytes: sodium (200mg) potassium (20mg) Caffeine: 0mgAntioxidant: none

Hammer Gels: touts real fruit and wholesome ingredients with no simple sugars or artificial sweetenersCalories: 90Total Carbohydrates: 23g from maltodextrin, fruit juicesAmino Acids: 45mgSugar: 2gElectrolytes: sodium (40mg) Caffeine: 0mgAntioxidant: none

Clif Shot gel: touts litter leash packageCalories: 100Total Carbohydrates: 25g from brown rice syrupAmino Acids: 0mgSugar: 8gElectrolytes: sodium (40mg) potassium (30mg), magnesium (20mg) Caffeine: 0mgAntioxidant: none

Clif Shot Bloks: 33 calorie chewable cubesCalories: 100 (3 cubes per serving)Total carbohydrates: 25g from brown rice syrupAmino acids: 0mgSugar: 8gElectrolytes: sodium (40mg) potassium (30mg), magnesium (20mg) Caffeine: 0mgAntioxidant: none

FRS Chews: touts quercetin, an antioxidant from blueberries, apples and grapesCalories: 40g (2 cubes per serving)Total Carbohydrates: 8g from sugar, corn syrupAmino Acids: 0mgSugar: 8gElectrolytes: 0mgCaffeine: 0mgAntioxidant: 250mg Quercetin

OCTOBER 2009 21


I N N O VAT I O N C A S E S T U D Y

Clif Bar is the quintessential California company, founded by typical, active California guy Gary Erickson, who during a bike ride one day in 1990 had an epiphany that he could make a better energy bar than the one he was eating. The idea became a Clif Bar and the company by the same name now features some of the best selling brands in the sports nutrition sector, as well as leading the industry in support of organic agriculture and overall sustainability. It’s a big mission for a relatively small, privately held company. But it’s working. With estimated sales of its bars at more than $170 million (€115 million) according to Nutrition Business Journal, and an expanding line of endurance energy chews and gels, as well as a brand new organic energy drink, Clif has found success by crossing industry lines in a way that few other companies have managed.

Clif ’s organic platform makes it unique in the sports nutrition world. Authenticity, transparency, certified organic is a part of Clif Bar’s fabric, and that mix is not matched by other lines in the sports performance environment, according to Bob Scowcroft, executive director of the Organic Farming Research Foundation, which does receive philanthropic support from the company. “I don’t know if the ‘O’ word is crossed through in every corner of their world, but I do know that when they had to address health and nutrition, they were one of the first to connect the dots, and not many companies talked about global warming before they did,” he said.

From the sports nutrition perspective, the impression is that Clif Bar & Company is a small player in the sector, but a leader in the area of organic foods, community support and sustainability. “They are not really in the same league as high-tech sports performance

companies. They are not as big, and they entered the game later,” said Doug Kalman, PhD, RD, CCRC, FACN, director of business development for Miami Research Associates, which specializes in sports nutrition research.

Part truth, part perception. Power Bar, Gu and Clif Clif Bar together make up around 90% of the energy gels and chews segment. And Clif Bar actually has some of the top-selling brands in the overall sport performance segment, according to NBJ, which recently reported that Clif is among the top-two selling brands for Quality Bicycle Products, the largest US distributor into the bicycle channel. At the same time, Clif is one of only a handful of successful certified organic companies that remain independent,

according to Phil Howard, a Michigan State University professor who studies organic industry consolidation.

SPORTS PERFORMANCE ROOTS

Though its overall image may tilt toward the organic side, due in part to the original Clif Bar’s popularity with the average consumer, in actuality, the company’s roots are firmly planted in sports performance. It all started with Erickson’s 175-mile bike ride. “Halfway through the ride, he was exhausted and hungry,” said company spokesperson Kate Torgersen. “Gary realized he just couldn’t eat another unappetizing, sticky, hard-to-digest energy bar.” That was the epiphany.

Erickson took his idea to “the best baker he knew”: his mother. After six months of experimentation, they came up with a nutritionally dense bar made with brown rice syrup, soy rice crisps and roasted peanuts, offering carbohydrates, protein and fibre for sustained energy.

The Clif Bar, named for Gary’s dad Clifford, is still the company’s top-selling product. Its sales in 2008 reportedly grew 10% to exceed $170 million (€115 million) while rival PowerBar, owned by Nestlé, saw its sales fall by 5% to $200 million (€135 million). In 2010 the small entrepreneurial company may well overtake the global giant. Clif has already overtaken Kraft-owned Balance Bar, which had sales of $130 million (€88 million) in 2008, an 8% fall compared to 2007.

In a market in which differentiation is difficult to achieve – one nutrition bar being much the same as another – the key to Clif ’s success has been its ability to innovate faster than its competitors and open up new categories that the corporate mindsets of

Clif: how a David out-smarts a Goliath

When Gary Erickson’s two biggest competitors in the energy bar business were bought out by Nestlé and Kraft it was understandable that he in turn considered selling out to Quaker Oats. But instead Erickson decided to keep his company, Clif Bar, privately-owned and embark on a path of radical product and marketing innovation. The strategy has been vindicated: almost 10 years later, Clif Bar’s market share is close to that of Nestlé-owned PowerBar, achieving double-digit growth even as the giant’s sales have fallen, while many larger and better-resourced companies now look to Clif Bar as a source of ideas. By KAREN RATERMAN and JULIAN MELLENTIN.

OCTOBER 200922


companies like Kraft and Nestlé struggle with. Perhaps one of the best examples is Clif ’s Luna Bar, a bar tailored to the nutritional needs of women. Luna bar began life supported primarily by guerilla marketing, such as sampling at fashion shows. By 2008 the brand had sales of over $40 million (€27 million) in supermarkets alone, according to IRI data, suggesting that the brand could be worth over half as much again when sales in convenience stores and health-food outlets are taken into account. Certainly Luna has overtaken its direct woman-specific competitor, PowerBar’s Pria Bar.

Over the years Clif has developed a whole line of endurance products under the Clif Shot brand, which is capitalizing on growing demand for convenient, portable energy products. Most recent are Clif Quench, an 88% organic energy drink, launched in June, and Clif Shot Roks, small, round protein bites for muscle recovery while on the go, launched last year.

Clif Shot gels were introduced in 1995, a couple of years after other category players, like GU and Power Bar gels. Since then, the company also introduced Clif Shot Bloks electrolyte chews (in 2005), as well as Clif Shot Electrolyte and Recovery drinks (in 2006), touted to be the first organic recovery drinks. Under the Luna brand, which began with the nutrition bar for women (1999), it has Sport Moons Energy chews, launched in 2007, the first organic energy chews for women.

All the products are geared for endurance athletes, who typically train several hours a week or work out for more than 45 minutes at a time, according to brand manager Chris Randall. A key point of difference for the

products is that their carbohydrate source comes from the minimally refined brown rice syrup with naturally occurring electrolytes. They also do not contain high fructose corn syrup.

MARKETING MIXES VALUES

To communicate both the high performance and natural message, Clif ’s marketing is a mix of extreme athlete antics meets down-home granola style. The packaging graphics tout bright colours and show an active lifestyle on 40% post consumer recycled plastic. The website design also has a wholesome feel with graphics that look like someone jotted notes in a recycled notebook. Video clips show the Clif-sponsored Garmin Slipstream team at the Tour de France. New product information is detailed in a “From the Kitchen” blog on the website. Throughout there is a simple message; “Food” equals Clif ’s products; “Play”

equals sponsored teams and “Soul” is the corporate philosophy. Another core part of the marketing strategy is to take the products directly to users at events, expos and in race bags.

Randall would not disclose the percentage of overall sales that the sports performance line makes up, but he did say it is a significant and growing part of the business. “We continue to strive for innovation in the category,” he said. Most recently, Clif also introduced some new packaging that addresses specific problems with gels and chews. The Clif Shot Bloks are now available in a FastPak™ that holds six of the chews and can be opened and eaten with one hand—a key issue, particularly for cyclists and runners in competition. Clif also says the FastPak™ uses 33% less packaging material than its previous package. Clif also offers its Clif Shot gels in a single serve package that has a patented Litter Leash®. The leash keeps the package tab attached, so


OCTOBER 2009 23


that it is not discarded and left on the trail. Randall claims the innovations are part of

Clif Bar & Company’s ongoing commitment “to provide athletes, outdoor adventure seekers and active people with delicious, all-natural and organic nutrition choices.”

Commitment is the operative word. While product development and profit are important, Clif Bar & Company is well noted for its tendency to do the right thing, not just the profitable thing. The corporate philosophy is outlined in its “Five Aspirations,” which include sustaining people, brands, business, community and planet. These tenants, the company says, will take it on its journey toward overall sustainability. Along the way the company supports organic farming to protect soil and water quality, preserve biodiversity and fight global warming. Clif is also working to reduce its ecological footprint by diverting 70% of its waste from local landfills through reduction, recycling and composting.

Current owners, Erickson and his wife Kit Crawford, are at the heart and soul of the programmes. Back in 2000, Erickson opted out of a $120 million (€82.7 million) deal with Quaker Oats, saying he wanted to retain control and keep the corporate values intact. It cost him. Literally. Erickson bought out his partner and serviced the debt to the tune of about $80 million (€55 million). But with that control the company is able to innovate in ways that others can’t, noted Scowcroft, “and they have probably exceeded the growth they would have had as part of a corporate portfolio. “

In its path to sustainability, Clif also sponsors athletic teams and develops community programmes, such as the Luna Fest, a traveling film festival of short films by, for and about women, that raises money for the Breast Cancer Fund; it also established Project 2080, which makes community service part of the workday by allowing employees to donate work time to causes like Habitat for Humanity.

These programmes and values are an important part of Clif Bar’s ongoing success. It has integrated an ethical component to their corporate mission that resonates with its customers, noted Scowcroft. “And when you begin to peel back the due diligence and see what they put into their ingredient selection, product launches, staff education and philanthropy, you begin to see the product in a different light. They are a company that has figured out how to live its mission.”

CLIF KIDS

Formulating its products to meet kids’ specific nutritional needs – and staying close to its grassroots customers – has been key to the success of Clif Bars’ plunge into kids’ products.

When in 2006 Clif Bar saw that sales of its ZBar kids’ energy bars were catching fire, the company decided to make the children’s segment a priority. Between 2006 and 2007 Clif Kid sales doubled, the company told NNB at the time.

Tailored to kids’ nutritional needs

The company’s initial target with ZBars, introduced in 2004, was to comply with legislation designed to combat childhood obesity by limiting the fat, saturated fat and sugar in foods sold in Californian elementary schools. ZBars use natural sugars and organic evaporated cane-juice syrup rather than high-fructose corn syrup. They contain no trans fats, artificial flavours, colours or preservatives. Made with organic rolled oats, soy and other natural ingredients, ZBar provides a balanced mix of protein, carbohydrates and fibre and contain vitamins A, C, B6 and B12, calcium and iron.

One important distinction that ZBar brought to the still-fledgling segment was that its nutritional profile was based explicitly on kids’ nutritional needs rather than borrowing adult nutritional requirements as some kids’ products do.

Original ZBar flavours were Chocolate Brownie; Peanut Butter; and Caramel Apple. A caramel or chocolate drizzle topped off each bar. Priced at a suggested $2.99 to $3.99 (€1.94-€2.59) for a box of six bars, ZBars were distributed initially in natural-foods stores and the natural-foods sections of some mainstream supermarkets.

The company worked hard to create products, messages and packaging that would effectively reach out to parents at the “first sale” and to kids at the “second sale”. The “first sale” is at the retailer, and Clif wanted all Clif Kid products “to appeal to parents at the shelf” so that mothers could feel confident about putting it in the lunch box. The “second sale” occurs when kids choose a snack from the family pantry. Hence it was also necessary to make products appealing enough to the kid from a fun and flavour standpoint so they come back for more.

Clif Kid’s second product line, Organic Twisted Fruit, was designed enable parents to give their children a dose of fruit when fresh fruit isn’t available, such as on a hike or riding a bike. Twisted Fruit bars were introduced in 2007, each a mixture of fruit puree and juices containing 9g of sugar, the naturally occurring amount. Original flavours were Strawberry, Sour Apple, Mixed Berry and Tropical Twist. Suggested retail prices were 79 cents to 99 cents (€0.51 - €0.64) per individual bar, about the price of a piece of organic fruit.


OCTOBER 200924



Sports drink muscling in on the mainstream

In a category defined by chemicals, pills and potions, sports nutrition has always found difficulty in connecting with the wider consumer. Muscle Milk is one of the few sports brands to have successfully widened its appeal to non-athletes, becoming hugely successful over the past five years. But use of the word “milk” on products can often be a bone of contention and Muscle Milk is now facing a protest from Nestlé. By MARK J. TALLON and JULIAN MELLENTIN.

Beginning as a powdered protein product for committed athletes, Muscle Milk turned into a meteoric success following its introduction as a ready-to-drink beverage in 2004. Muscle Milk n Oats snack is one of the brand’s more recent extensions.

It’s the single most common ambition of sports nutrition brands: to penetrate the mass market while successfully retaining their core sports consumer. But it’s also an ambition with which very few brands have had any success. The outstanding exception is California-based CytoSport – led by career race-car driver Greg Pickett and his son Mike Pickett – which launched its Muscle Milk brand in 2001 and since then has developed it into one of the best selling high-protein beverages.

CytoSport was initially built on the acquisition of the Cytomax brand from Champion Nutrition, where CytoSport co-founder Mike Pickett had worked as CEO and President for many years before establishing CytoSport in 1998.

In 2001 Muscle Milk was launched, backed by the confidence of strong brand loyalty established for the Cytomax brand, the company’s then-main product for the hardcore sport nutrition market.

Beginning as a powder for body-builders and elite athletes, Muscle Milk’s rapid growth can be dated to its launch in ready-to-drink formats in 2004. These beverages are shelf-stable, sold in health food stores and supermarkets and are labelled and marketed as dietary supplements.

FOUR ELEMENTS OF SUCCESS

Marketed with the tagline, Healthy, Sustained Energy, Muscle Milk communicates four elements. The first is “premium proteins” – the product typically delivers a dose of around 34g of protein per 500ml, using milk protein isolate and whey.

The second element is described on the company’s website as:

Functional Fats: Predigested, trans-fat free Medium-Chain Triglycerides (MCTs) are more likely metabolized for muscle energy and heat than stored as fat. Long-chain polyunsaturated and monounsaturated fatty acids from Sunflower/Safflower and Canola Oils are also less likely to be stored as fat. These lipids are additionally functional, since they enhance mineral retention.

The third element is its lactose-free credentials, emphasized on the front of the pack, and the fourth is an emphasis on tastes that appeal to the target consumer,

with Muscle Milk available in a wide range of flavours, such as chocolate and cookies n’cream.

Muscle Milk’s positioning is intended to give it appeal to the hardcore athlete, the weekend warrior and the health-conscious, taste-driven hockey mom.

Initially, CytoSport played on the idea of the product as being like a mother’s milk. At launch, CytoSport ran with the tag-line, ‘Builds Muscle like a Mother’, and although this was quickly dropped, the concept behind the formulation spread through word-of-mouth. The associations with mother’s milk – as innately safe, nutritious and good-for-you – became a significant factor in the product’s cross-over appeal.

Another factor behind the success of Muscle Milk has been its price. Although the price of Muscle Milk now fits well with its competitors, selling around 10% below some leading brands, at launch its ultra-premium price of $3.40 - $3.99 (€2.39 - €2.80) created a strong bottom line and good margin incentive for distributors, and more importantly retailers, to give Muscle Milk key positioning and promotion in-store.

What also boosted Muscle Milk’s ability to grow, despite premium positioning, was a relationship with GNC, America’s biggest health food store chain, with over 5,000

OCTOBER 2009 25


outlets. This channel helped the transition of Muscle Milk from specific sports nutrition brand by putting it in the places where mainstream health-active consumers shop – just the people who are willing to pay a premium for something that meets their perceived nutritional needs.

Already strong distribution has been made even better following a distribution deal with Pepsi Bottling Group, which takes the brand into a much wider range of retail outlets.

NEW SEGMENTS

More recently the brand has been extended into new segments with the launch of on-the-go oat-based breakfast snacks and high-protein snack bars. CytoSport has also created a new kids’ brand, called Mighty Foodz, which includes Mighty Milk, with vitamins, puddings and bars to follow.

Privately-held CytoSport doesn’t disclose detailed sales figures, but according to Nutrition Business Journal, Muscle Milk had sales of over $280 million (€191 million) in 2008. The popularity of Muscle Milk’s nine different flavour SKUs and 27 other sports products has catapulted CytoSport from a five-person operation in Walnut Creek to a more than 150-employee organization in a little over 10 years.

CytoSport’s growth has been supported by private equity firm TSG Consumer Partners, which was also a backer of Glaceau Vitamin Water, sold to Coca-Cola in 2006 for $677 million (€463 million).

NESTLÉ CHALLENGE

CytoSport’s development of Muscle Milk is a great lesson in brand value creation for those wishing to transition from niche to mainstream.

But success can bring its own problems. In the summer of 2009, Nestlé USA made a complaint against Cyosport, alleging that Muscle Milk is deceptively named and marketed because it does not actually contain milk and that consumers are likely to be misled into thinking that they’re buying a flavoured or supplemented milk product, when in fact, the product is a water-based dietary supplement.

Nestlé, which makes milk-based beverages under brands like Nesquik and Carnation, filed a complaint with the National Advertising Division (NAD) of the Council

of Better Business Bureaus (CBBB). The NAD in turn referred the

matter to the Federal Trade Commission (FTC) and the FDA. In June, Nestlé USA also filed a petition with the US Patent & Trademark Office, to revoke Muscle Milk’s trademark.

For its part Cytosport maintains that the claims for its product are truthful and non-misleading and that Muscle Milk is a non-deceptive registered trademark.


FIVE STEPS TO BUILDING A POWERFUL SPORTS NUTRITION BRAND

1. Build your brand and not a company. Consumers understand what a particular branded product delivers and this is vital as you move into new consumer demographics where company reputation may count for little.

2. Create the market, don’t serve it. With thousands of new products flooding the sports market every month finding a market segment with a zero value (no competition) is the most effective route to becoming a market leader.

3. Be the innovator. Sports nutrition is lead by a few mega-brands i.e. Iovate (Muscle Tech brand) for sports supplements. However, to overcome or at least challenge for a number 2 position you need to differentiate. Being an innovator or choosing a position that is in direct contrast will gain the attention of the sports consumer ready for the next best thing.

4. Build slowly and socially. With sports nutrition being distributed more and more online, social networking and online media are developing as key factors to company success. Building up your core consumer base and a reputation for integrity and authority while offering exceptional consumer service will help enhance growth and loyalty.

5. Don’t forget your core. When looking to diverge into the mainstream you need to think about how your company previously marketed to its core consumer. What does your current product name say and what messaging does the packaging reflect to the mainstream consumer?

However, of most importance for transitioning from niche to mainstream is that the brand’s position remains consistent so that the loyalists feel the brand has not become diluted or strayed away from its core message. Muscle Milk has achieved this by focusing on the benefits of protein, great taste and affordable pricing thereby appealing to both consumer groups.

MUSCLE MILK INGREDIENTS & NUTRITION FACTS

OCTOBER 200926


Recession has joined nutrition as reasons that Americans are minding their vegetables more than in recent memory. Libby’s is one of the venerable major canned-vegetables brands that is happy to oblige the increasing national attention to vegetable consumption.

“We find ourselves in the most difficult economic times in 60 years, so canned vegetables are a great solution for bringing healthy and nutritious meals to the table,” Bruce Wolcott, vice president of marketing for Seneca Foods, which owns the Libby’s brand, told New Nutrition Business. “It’s the most cost-effective way of getting vegetables into your diet.”

Sales results in the traditionally slow-to-grow canned-vegetables business underscore Wolcott’s point:

Corn. Libby’s biggest seller is canned corn. Its regular variety notched a 5.9% sales increase for the year to date ended May 17, in US outlets measured by Information Resources Inc., which tracks sales in

supermarkets, drug stores and mass retailers except Wal-Mart. And sales for the highly fragmented overall corn category grew by about 10% in the period.

Similarly, last year, the first year of the deep US recession, Libby’s regular canned-corn sales grew by 9%, to about $15 million (€10.5 million) for the year. But for 2007, when the economy still hummed, Libby’s canned-corn sales fell by 6%.

Green beans. Libby’s green-bean sales rose by about 8% for the period ended May 17, as did the category’s, according to IRI. That followed a 4% surge for its regular green beans in 2008, up to annual sales of about $12 million (€8.4 million). But 2007 sales dropped by 3%.

Peas. Sales for the third of Libby’s three major canned products, regular peas, rose by more than 7% for this year to date through May 17, IRI said, while category sales were up more than 8%. Last year, sales of Libby’s peas rose by 3%, to about $5 million (€3.5 million), following a 7% decline in 2007.

Due to tighter household budgets, Wolcott said, Libby’s private-label business has been picking up as well in terms of share of its sales. Now, private-label canning accounts for as much as 75% of Libby’s overall business, up somewhat from a couple of years ago.

Canned vegetables, of course, are a commodity business, with relatively little innovation in products or technology – especially compared with their counterparts in the freezer aisle, where new microwave-steamed products are all the rage.

The industry not only acknowledges that but, in some ways, revels in being an old-school part of the food business. “We like to say that times of famine, drought and pestilence are great for canned veggies – they make everyone a captive audience,” Wolcott said. “But on the flip side of course, when times are good, people are looking for more esoteric things.”

In fact, Libby’s pricier canned-veggie offerings indeed are suffering with the economy. It was the first major conventional

Back-to-basics mood boosts cans

It seems canned vegetables are enjoying experiencing a renaissance brought on by recession – suddenly, their value-for-money wholesomeness seems right. American brand Libby’s is hoping to tap into the sober mood with a new website promoting family eating, and with a new, better-value fruit offering. By DALE BUSS.

V E G E TA B L E S C A S E S T U D Y

OCTOBER 2009 27


vegetable brand to offer organic canned vegetables, three years ago; then others followed. But the price points, 40 to 50 cents (€0.28 - €0.35) a can higher than regular vegetables, have hampered Organics’ takeoff.

Libby’s also recently introduced a Gourmet line – with fancy products including sliced pickled beets, baby whole carrots, and gold-and-white whole kernel corn – that now “aren’t doing great because of the economy,” Wolcott said. For 2009 through May 17, according to IRI, sales of Gourmet corn, beans and peas plunged by 56%, 33% and 31%, respectively.

And several years ago, Libby’s introduced a Naturals line that was packaged only in water and priced 20 to 30 cents (€0.14 - €0.21) higher per can than regular Libby’s fare. Sales surged by double-digit percentages a few years ago, but they have never become big-volume sellers.

Libby’s emphasizes its nutritional advantages even though it’s hard to argue that canned veggies are more appealing in taste and esthetics than competing forms.

“Our products are picked and packed at the peak of ripeness and hermetically sealed, unlike frozen vegetables,” Wolcott said. “It

doesn’t matter how old a can gets, 10 or 20 years, the nutrients are locked in and never leave. That’s not true with frozen, where evaporation takes place. And it’s certainly not true with fresh, where the clock ticks from the minute that product is picked. Fresh green beans on a steam table are just losing nutrients by the minute.”

TAPPING INTO THE BACK TO BASICS MOOD

Libby’s also has begun using internet marketing to try to capitalize on the back-to-basics, budget-conscious mood of American grocery shoppers these days. It boasts a new web site, GetBacktotheTable.com, that features many recipes relying on its vegetables, and it also has been reaching out to mommy bloggers.

“The site promotes the idea that when families eat together, meals tend to be better,” Wolcott said. “And research shows that kids get better grades in school and have fewer social issues.”

At the same time, however, Libby’s hasn’t been specifically emphasizing children’s need to eat more vegetables in its marketing to mothers. “Food shopping is serious business,” Wolcott said. “You don’t want to put a cartoon on a can of green beans or sweet peas. Kids won’t exactly rush to bug Mom to buy it, and the head of the household might say: ‘What’s this all about?’

“We want to get families back to the table eating together. If they do, more vegetables will show up there. And more of our vegetables.”

FRUITIFICATION

Libby’s also is big in the fruit business, and this fall the brand is making hay with its Jumbo Cups of fruit: a new 6-oz. plastic container that is also sturdier than the segment’s traditional, flimsy 4-oz. cups. It’s a nutrition as well as value play.

There’s no particular reason that 4-oz. cups became the standard for this product category. “But it’s just not enough for the majority of people for a snack or a dessert,” said Bruce Wolcott, vice president of marketing for Seneca Foods, the $1.3-billion (€897 million) company based in Marion, N.Y., that is parent of the Libby’s brand.

“Every time they do it, they feel hungrier than when they started. Six ounces is the right size,” he said, and the larger cups deliver 50% more fruit than the 4-oz. standard. They retail for a suggested $3.39 (€2.34) per three-pack of cups, or 19 cents (€0.13) an ounce, versus retail prices of $2.79 (€1.89) for a four-pack of Libby’s traditional 4-oz. cups, which works out to 17 cents (€0.12) an ounce.

Besides, Wolcott added, “Americans are supposed to ingest 3 1/2 cups of fruit a day, and this is a way of getting more fruit into their diets.”

The new products come in four varieties: Diced Peaches, Diced Pears, Mixed Fruit and Cherry Mixed Fruit. Libby’s has begun marketing the new line under the tag line, “The Fruitification of America”.

Also, being stronger, the 6-oz. cups are more puncture-resistant than 4-oz. commodity cups and easier for maintaining control. “The Jumbo Cups have a higher lip and so all the juice stays in the cup,” raved a blogger at Simple-MomReviews.com who got to preview the products. “I didn’t have any spills with these.”

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OCTOBER 200928


N E W P R O D U C T S

Country Company Brand & Product Description

PART 1: NORTH AMERICA – FOODS & BEVERAGES

All new product information is sourced exclusively from Mintel’s GNPD (Global New Products Database), which can be visited at

www.gnpd.com. Mintel can be contacted at 18-19 Long Lane, London EC1A 9PL, U.K.. Tel. +44-(0)20-7606-4533, Fax +44-(0)20-7600-3327

FUNCTIONAL & HEALTHY-EATING NEW PRODUCT LAUNCHESEach month we summarise new product launches from around the world.• Part 1: North America • Part 2: Rest of the World

BAKERY

Canada Canada Bread Company Dempsters’s WholeGrains Prebiotic Multigrain Tortillas

These 100% wholegrain tortillas are made with inulin and contain 6g of fibre per unit. Low in saturated fats and a source of seven nutrients.

USA Vitalicious VitaMuffin VitaTops Cranberry Muffin Tops

An alternative to cereals and bars. Low in sodium and fat and enriched with 15 vitamins and minerals. Each contains 5g fibre, 4g protein and only 100 calories.

BEVERAGES

Canada 7-Eleven Inked Energy Citrus Shot A natural product that helps to temporarily promote good health, alertness, endurance, motor and cognitive performance and relieve fatigue. Comes in a 71ml bottle.

Canada Coca-Cola Nestea Vitao White Tea Made with mandarin and orange fruit juice and baby tea leaf buds minimally processed to preserve their plentiful natural tea antioxidants. Combines tea antioxidants (EGCG) with vitamins C and E and calcium, with 90 calories per serving.

Canada PepsiCo Amp Energy Energy Drink with Black Tea

With guarana, taurine, ginseng and B-vitamins. “Developed for periods of increased mental and physical exertion and promotes wakefulness and restores mental alertness and vitality”.

Canada PepsiCo Starbucks Coffee Double Shot Vanilla Flavoured Energy & Coffee Beverage

With guarana, ginseng and B vitamins. Said to increase mental and physical exertion, and to promote wakefulness.

Canada Sun-Rype Products Sun Rype Light & Refreshing Blackcurrant Peach Juice

With 25% less calories than Sun Rype 100% juice and no artificial colours, flavours, sweeteners or sugar added.

Canada Wet Planet Beverages Jolt Endurance Shot Energy Drink Sugar-free, said to temporarily help promote alertness and wakefulness, and to enhance cognitive performance. Also claimed to relieve fatigue, promote endurance, enhance motor performance, help maintain good health, and increase the formation of red blood cells.

Canada Nestlé Waters Nestlé Pure Life Splash Plus Cranberry Flavoured Water

Enhanced with vitamin E, and is claimed to contain protective antioxidants for the maintenance of good health. Zero calories, sugar and artificial colour.

USA Apple & Eve Apple & Eve Fruitables Berry Berry Juice

Contains one full serving of fruits and vegetables, and is said to have less sugar than other juices and juice drinks. A good source of vitamin A & E, contains 100% vitamin C, and no added sugars, preservatives, colours and artificial sweeteners. Only 70 calories per serving, free from high fructose corn syrup.

USA C2O Pure Coconut Water C2O Pure Coconut Water An all natural isotonic beverage, with no preservatives, and said to have more potassium, less sodium and fewer calories than most sport drinks.

USA iChill Beverages iChill Berry Flavour Relaxation Shot Contains melatonin, Valerian root, rose hips and B-vitamins that “help calm the body and mind at the end of a stressful day”. No sugar, carbohydrates or calories.

BREAKFAST CEREALS

Canada Weetabix Weetabix Oatibix Breakfast Cereal Made with 100% whole grain oats and contains 4g fibre, 6g protein, and 2g sugar per 47g serving.

USA CerealVit CerealVit Organic Benevit Multi Grain A multi grain flake cereal with rice and buckwheat, which is low in sugar and fat. Also available are Organic Coffee Flakes, corn and flax flakes coated with organic Italian coffee and fortified with 140mg omega 3 per serving.

Canada Avalon Dairy VitalaMilk 1% Partly Skimmed Milk Contains DHA and omega-3 fatty acid “to support the normal development of the brain, eyes and nerves”, 5g of conjugated linoleic acid (CLA) per 250ml serving, calcium, vitamins A and D. VitalaMilk cows are fed a diet enriched with DHA omega-3, flaxseed and organic selenium.

USA Breyers Yogurt Company Breyers Yo Crunch 100 Calorie Packs Vanilla with Chocolate Chip Cookie Pieces Nonfat Yogurt

Contains live cultures and vitamins A & D and is made with erythritol, a natural sweetener.

USA Danone Danone Activia Fat-Free Oatmeal Flavored Light Yogurt

Contains 0% fat, is low in calories and contains the DanRegularis Bacillus, “to keep a balanced digestive system”.

USA Turtle Mountain So Delicious Strawberry Flavoured Coconut Milk Kefir

Certified gluten-free and suitable for vegans. Said to “ enhance the overall sense of well-being” thanks to the coconut milk, which is naturally rich in medium chain fatty acids (MCFAs) of which two found in coconut milk, lauric and capric acid, are said to support the body’s immune system. Also contains 10 live cultures.

USA Yoplait Yoplait Fiber One 50 Calories Yogurt range

Fat-free yogurts with fibre and added vitamins A & D. Range includes: Strawberry; Vanilla; Peach; and Key Lime flavours.

DESSERTS & ICE CREAM

USA Yoplait Yoplait Parfait Bites Frozen Yogurt Bites Strawberry flavoured filling coated in granola. The all-natural product contains live and active cultures, and 150 calories per pack.

USA Inter-American Products Active Lifestyle Gelatin Cups Said to boost immunity and promote digestive health with dietary fibre support. Comes in pomegranate and pomegranate blueberry natural flavours.

MEALS & MEAL CENTERS

USA ConAgra Foods Healthy Choice Portabella Spinach Parmesan Pasta Entrée

Contains 270 calories, 5g fibre to promote digestive health, and 15% of the DV of vitamin A and 10% of zinc. Free from preservatives. The Tomato Basil Penne variety is said to help promote digestive and heart health.

USA General Mills Green Giant Healthy Heart Pearled Barley, Sugar Snap Peas & Julienne Carrots in an Herb Infused Extra Virgin Olive Oil Sauce

Said to help naturally lower cholesterol to promote heart health.

DAIRY & DAIRY ALTERNATIVES

OCTOBER 2009 29



Country Company Brand & Product Description

PART 2: REST OF THE WORLD – FOODS & BEVERAGES

SIDE DISHES

Canada Metro Brands Irresistibles Life Smart Macaroni Pasta Made with 100% wholegrain, very high in fibre, contains 12g of protein per 85g serving.

USA Barilla Barilla Plus Farfalle Described as “the first multigrain pasta that provides a strong foundation for a nutritionally balanced meal”. Made with ingredients (including multigrains, egg whites, lentils and chickpeas) which provide a good source of protein and ALA omega-3. Each 100g portion offers 17g of protein, 360mg of ALA omega-3 and 7g of fibre from durum wheat, oats, spelt and barley.

SNACKS

USA One Square Meal Now One Square Meal Cranberry Meal Replacement Bars

Two individually wrapped bars made with real fruit, with a low GI and no artificial flavours. No refined cane sugar, nuts, or GM soy protein.

USA Genisoy Genisoy Sweet Crisps Cinnamon Streusel

Multigrain sweet crisps, low in sodium, contain only 90 calories and free from cholesterol, artificial ingredients and flavours. Said to deliver 300% more protein than other crisps and “provide a mental and physical energy boost”.

SOUP

USA Campbell Soup Campbell’s Chunky Beef & Dumplings with Hearty Vegetables

Made with lean meat and one full serving of vegetables. Low in fat and is a good source of protein, vitamins C and A, and potassium.

BAKERY

Australia Aussie Bodies Healtheries Kids Care Crunchie Munchies Bite Sized Chocolate Cookies

Said to contain 35% less sugar, 45% less saturated fat, and 25% less salt than other leading brands’ products. These dairy-free cookies contain no artificial colours or flavours, and are a source of fibre.

China Far East Haichuang Biotechnology Artemis Dietary Fiber Biscuits Made from rice bran, rice germ, L-carnitine, rice flour, vitamins C and B6, egg white and honey. Said to help reduce body weight and maintain good health. With 25% dietary fibre.

Mexico Santiveri Santiveri Cooki Sanas Galletas Integrales con Naranja (Wholemeal Orange Cookies)

Enriched with folic acid, are high in fibre and contain no added sugar or lactose. The product is claimed to have a bifidus effect and to help lower cholesterol levels. It also contains fructooligosaccharides that help the growth of bifidobacteria in the intestines.

Netherlands Lu Liga Milk Break biscuits New are Forest Fruits & Raspberry; and Choco & Banana varieties. The wheat biscuits contain a milk filling, and are enriched with calcium, iron and vitamin B6. Said to be better in three ways because they contain 30% less sugars, 30% less saturated fats and three times as much fibre as other average milk biscuits.

Portugal Cerealis Produtos Alimentares Nacional + Fibra Bolacha Integral (Wholegrain Biscuits)

Contain 76% cereals with 11% fibre and are said to promote a balanced and healthy digestive system.

Spain Nutrition & Santé Gerblé Nutrición y Vitalidad Galletas Soja Higo (Soya & Fig Biscuits)

Rich in vitamins E and B9, magnesium and antioxidants and are said to help control cholesterol levels. Contains less sugar and fat than regular varieties, “to maintain a healthy cardiovascular system”; no GMOs, colourings, flavourings, preservatives or hydrogenated fat, and is formulated with whole sugar cane.

Ukraine Nairn’s Nairn’s Rough Oatmeal Oatcakes Low GI and wholegrain oatcakes with no wheat or added sugar. Free from artificial colours, flavours, preservatives and hydrogenated fat. They are high in fibre, suitable for vegans and contain no GM ingredients. Also available are: Mini Oatcakes; Organic Oatcakes; Fine Oatcakes; and Cheese Oatcakes.

Venezuela Compañia de Galletas Noel Noel Tosh Galletas con Avena y Frutos Rojos (Oatmeal Cookies with Red Berries)

Contain 60% of wholegrain and also fibre, which are said to help control cholesterol levels and to help the digestive system.

Venezuela Industrias Rodriguez Virginias Nova Forma Barquillos Rellenos Sabor Nata (Cream Filled Wafer Biscuits)

Contain xylitol, are free from sugar, fructose and saccharose, and provide a bifidus effect.

BEVERAGES

Germany Javital 60 Ments Premium Vital Drink Formulated with royal jelly and L-carnitine. A combination of 18% fruit juices with 3% vegetable juices and features many plant and seed extracts, oils, vitamins and minerals. The calorie-reduced drink retails in a 0.33L metal bottle.

Hong Kong DKSH Trimec Café Sugar Free Matcha Latte Plus

Features a “3L” Japanese formula, which is designed to reduce fat at arms, stomach, thigh and bottom. The “3L” formula contains L-carnitine, L-glutamine, L-glycine, catechins, polyphenols, amino acid, formic acid and taurine. Said to effectively burn excess fat three times faster and provide a 24 hour effect. It also “promotes metabolism, reduces body swelling and enhances antioxidant ability”.

India Khandelwal Food Products Indica Amla Juice Known for being a rich source of anti-oxidants and vitamin C. Said to “regulate the metabolism, purify the blood, reduce acidity, act as a colon cleanser, bring a healthy shine to skin, eyes and hair, increase vitality, enhance protein synthesis and flush out toxins”.

Japan Kagome Tomato Juice Made entirely from ripe domestic tomatoes harvested in the summer of 2009. Free of sugar, colouring and added preservatives, and provides 19mg of lycopene.

Netherlands Coca-Cola Burn Intense Energy Drink with Taurine Enriched with caffeine, taurine, and vitamins B3, B5, B6 and B12. Retails in a resealable 485ml can with a rotating valve which can retain the product’s freshness for up to 24 hours. Also available is an Intense Energy Shot variety.

Portugal PDP Gerlinéa Substituto de Refeiçao para Controlo de Peso (Meal Replacement Drink)

This chocolate-flavoured ready-to-drink product is said to reduce the hunger sensation between meals. Contains 12 vitamins, 11 minerals and all necessary nutrients but with a low level of calories compared to a normal meal. Comes in a pack containing 4 X 250g bottles; each bottle is said to be equivalent to one meal.

Spain Together Healthy Together Health Drinks Acai Age Defence Drink

Contains natural omega oils and acai pulp bits.

Ukraine Schneekoppe SchneeKoppe Vital Cabbage Juice with Sea Salt

Said to be good for digestion and useful during special diets. Also available is a Beetroot Juice.

BREAKFAST CEREALS

Australia Nestlé Uncle Tobys HealthWise Cereals for Bone Well Being

Claimed to be rich in calcium and magnesium for strong bones, contains magnesium and zinc for bone structure and strength. A wholegrain product made with milk calcium.

OCTOBER 200930



Brazil Mãe Terra Mãe Terra Trato Mix Completo Integral (Wholegrain Breakfast Cereal Mix)

With oat flakes, ground linseed, wheat fibre, dried apple, raisin, wheatgerm, sunflower seeds, cashew nuts, black sesame and cinnamon. Rich in proteins and fibre, a source of iron, low in sodium and GI, and free from trans fat, preservatives, additives, artificial flavourings and transgenic ingredients.

Hong Kong The Goodcarb Food Company Lizi’s Pink Apple and Cinnamon Granola According to the manufacturer, pink apple contains antioxidants, polyphenols, flavonoids and natural fruit sugar. Pink apples are said to be good for heart, digestive system and blood sugar. Cinnamon is said to be good for blood sugar control. This wheat-free, high-fibre granola contains no added salt or GMO ingredients. Contains 6.5g glucose equivalent per serving.

Mexico Grupo Gamesa Quaker Avena Flakes Hojuelas Fortificadas con Avena Quaker (Oat Flakes Cereals)

Low in sodium and fat and contains a good amount of fibre. Rich in beta-glucans, which “may help to decrease the concentration of total cholesterol and LDL cholesterol in the blood”.

New Zealand Sanitarium Sanitarium Fibre Life Bran and Oats Cereal with Berry

Said to be very high in fibre, provides a source of antioxidants and a good source of whole grain. Approved by the National Heart Foundation and contains no artificial colours or flavours. Said to maintain inner digestive health, “help you feel fuller for longer and curb the appetite for mid-morning snacks, and provide wholegrain goodness and carbohydrates for a healthy, energised start to the day”.

South Africa Kellogg Kellogg’s All-Bran High-Fibre Fruit & Oats

Contains: protein, “for muscle strength”; vitamin A & antioxidant nutrients “that protect the body from damage caused by increased oxygen use”; vitamin C, “that enhances the immune system & may lessen the duration of a cold”; B complex vitamins, “used for energy production, tissue repair & maintenance”; and iron, “used by the enzymes involved in energy production & stamina”.

Thailand Baan Thanyathip Nutri Mate Instant Gaba Rice Wheat Germ Plus

Germinated brown rice with a greater amount of the naturally occurring gamma amino butyric acid which is an inhibitory neurotransmitter said by the manufacturer to “promote fat loss, enhance the sleep cycle for deeper rest and relaxation, boost the immune system, lower blood pressure, and inhibit the development of cancer cells”.

UK Asda Asda Great Stuff Prebiotic Multigrain Stars

Asda’s Great Stuff range of kids’ favourite meals have tightly controlled fat, salt, sugar and saturated fat levels. Made of rice, oat, barley and caramel prebiotic cereal stars with sugar and caramel flavoured coating. Fortified with vitamins and iron, contains inulin for healthier digestion, and wholegrains.

DAIRY & DAIRY ALTERNATIVES

Australia Avo Avo Avocado Oil Spread Contains 20% all-natural avocado oil, is free from cholesterol, contains less than 1% trans fats, 45% less fat and 55% less sodium than margarine or butter, and Vitamin A & D. Approved by the National Heart Foundation.

Austria Nöm Nöm Fasten 0.9% fat Natural Cottage Cheese

With probiotic yogurt and inulin.

Belgium Distriborg Bjorg Délice Noisette Boisson (Hazelnut Delight Drink)

An organic certified drink with no cholesterol or lactose. Said to be easy to digest and low in saturated fatty acids. Made with 100% vegetable ingredients. The company promotes the use of European ingredients to shorten the distance travelled in processing. Also available is a Boisson Amandes (Almond Drink) variety.

Greece Vivartia Delta Daily Active Prebiotic Milk Drink Pasteurized and homogenized fresh cow’s milk from Greece. Contains 1.5% fat.

Indonesia Nutricia Nutrima Vanilla Flavour Milk for Pregnant Women

A vitamin- and mineral-fortified product, also comes in Chocolate flavour.

Italy Danone Danone Vitasnella Vita Più 5 Cereali 5 Cereali Yogurt Frutti Rossi (Low-Fat Red Fruit Yogurt)

Formulated with five cereals and contains only 0.1% fat per serving. Naturally contains more calcium and protein than a regular yogurt, and is claimed to be the only yogurt to contain five vitamins.

Poland Danone Danone Activia Suszona Sliwka (Dried Prune) Flavoured Yogurt Drink

With probiotic Acti-regularis cultures, it is claimed to help regulate intestinal functions. According to the manufacturer, one 300g bottle should be consumed daily for a difference to be felt.

Singapore Unicurd Food Unicurd I’sojoy Collagen Tofu Dessert Contains 2,500mg of collagen per 180g tub. This chilled ready-to-eat dessert is also available in a Dietary Fibre Tofu Dessert variety.

South Korea Dongwon Dairy Food Denmark Milk Cholesterol Mini Milk Made from low fat milk and processed using a Molecular Inclusion Technology (MIT). Contains L-carnitine.

Spain Danone Vitalinea SatisfAcción Yoghourt con Fresas Edulcorado Desnatado y Cereales Tostados (Low-Fat Strawberry and Cereals Yogurt)

Contains 0% fat, and features ‘profibras’, a unique association of milk proteins and natural fibre “that helps to calm the appetite for longer”. Also available in Strawberry, and Low-Fat Peach and Cereals varieties.

Spain Puleva Puleva Calcio Leche Semidesnatada con Café (Semi-Skim Milk with Coffee)

Enriched with calcium, vitamins A and D and coffee extract. Provides 35% of the RDI of calcium to help maintain healthy bones. Also available is a Muesli variety.

Thailand Friesland Foods Foremost Foremost Calcimex Healthi Bonez UHT Low Fat Milk with Black Sesame & Cereal

Rich in vitamins K, vitamin D and calcium.

Thailand TDI Manufacturing Dumex Mama Natural ProteQ Plain Flavoured UHT Skimmed Milk for Pregnant & Breast-Feeding Women

Combining a patented formula of added fibre with DHA extracts from seaweed, this halal-certified low-fat milk contains no added sugar.

UK Danone Danone Activia Mango Yogurt Said to help reduce digestive discomfort such as bloating, and to improve the health of the digestive transit. The vegetarian yogurt with fruit contains the culture Bifidus ActiRegularis.

SNACKS

Australia Smith’s Snackfood Grain Waves Wholegrain Chips Made from corn, wheat and oats. Contains 25% less fat than regular potato chips.

Portugal Bicentury Bicentury Pierde Peso Barritas Sustitutivas de Fresa con Chocochips (Strawberry and Chocolate Chips Weight Loss Bars)

Said to help reduce weight in a safe and efficient way. Enriched with 12 vitamins and 10 minerals and every two bars are said to be equivalent to one meal.

SUGAR & GUM CONFECTIONERY

Italy Caffarel Caffaerl Armonia di Colori (Colour Harmony)

A new range of coloured boiled sweets with specific benefits. Range includes the following: Energia Caffè e Ginseng (Coffee and Ginseng Energetic Candies), which are free from added sugar and low in calories; ACE Candies; Camomile and Hawthorn Candies; and Lemon and Ginger Candies.

Japan Meiji Seika Kaisha Fruit Juice Gummies (Red Apple) Made with 100% apple juice from the Aomori Prefecture. With 2,500mg of collagen per pack and are free of colouring.

OCTOBER 2009 31


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6



5



Consumer challenges – quick-hit campaigns that offer tangible and rapid results for those

who follow the rules of the programme – have been the key driver of Special K’s success

and have become synonymous with the brand.

Kellogg Special K – the billion dollar weight management brand

4 NEW NUTRITION BUSINESS


In contrast with the sharp focus on “drop a jeanssize” and similar results-oriented messages that arethe distinctive and consistent communications ofSpecial K breakfast cereal (since 2001),

Kellogg seems to have struggled to find the rightpositioning for its water.

At launch the label carried a tape measure in anecho of the Special K drop a jeans size conceptwhile advertising promised that: “Losing up to 6pounds in 2 weeks just got easier!”

In its current incarnation the brand has evolved tosay on the label that it: “Takes the edge offhunger”

MUDDLED MESSAGES?

3



Sales of Kellogg’s Special K20 Protein Water were never high – and now have collapsed,

falling 28% this year. Kellogg’s extension of a breakfast cereal brand to water with a

weight management benefit has proved to be a brand stretch too far. Poor merchandising

didn’t help.

With sales apparently tumbling it’s hard to see how this brand can survive. The recent

launch of Special K Protein Shakes suggests that Protein Water’s days may be numbered

and Kellogg is keen to take a new direction in weight management beverages.

Special K20 Water’s look, shape and

messages have all undergone significant

change in the two years since it was

launched, suggesting that Kellogg was

searching for the right positioning.

BRAND FUTURE IN QUESTION

2

NEW NUTRITION BUSINESS© New Nutrition Business

1



Kellogg makes second attempt

at protein drink market

NEWS ANALYSIS

To fi nd out more e-mail: [email protected]

OCTOBER 200934


A reminder of what New Nutrition Business

gives youOver the last 12 months New Nutrition Business has delivered to you unrivalled analysis of the business of foods, beverages and health.

We published more than 70 case studies during the year, including:

8 on weight management

7 on science commercialization

5 on snacking

8 on beverages

4 on start-ups

4 on strategy

3 on omega-3

2 on brand failure

3 on marketing

And many, many more!

Our case studies have addressed digestive health, joint health, bone health and many other health issues.

Categories covered include dairy, juice, water, baked snacks, breakfast cereals.

All this in addition to our opinionated, well-informed editorial analysis!

Together, our case studies enable you to make the best-possible decisions for your business.

FEBRUARY 2009

19

N E W N U T R I T I O N B U S I N E S S

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I N G R E D I E N T S T R AT E G Y C A S E S T U D Y

Fish tends to enjoy a lofty status as an

intrinsically healthy food, and is something

people are consistently urged to eat more of.

Certain species can also lay claim to being

“naturally functional”, thanks to their high

content of omega-3, and have seen sales

surge as a result.

But it is less usual to come across fish

products which have been fortified with

added ingredients to provide a health benefit

and positioning.

There are signs this is changing, however.

In Germany, for example, a small but

innovative canned fish producer, RügenFisch,

has developed a range of shark catfish

products enriched with Belgium-based

Beneo-Orafti’s Beneo-branded inulin.

The new range, sold as Leichte Linie,

is marketed on the platform that it is low

in fat and high in fibre. Neatly, the inulin

supplies both of these benefits, as it acts

simultaneously as an effective fat replacer and

a prebiotic.

The ingredient is added to the sauces and

the dressings which accompany the products

in the range. It is the oil in these marinades

that is responsible for most of the fat content

in these kinds of products, not the fish. This

means replacing fat with inulin can make a

big difference to their nutritional profile.

Adding 4g of inulin to a 100g Leichte

Linie product means cutting the fat content

to less than 5%, compared with about 15%

for an equivalent standard product. But

Liv Janvary, from Beneo-Orafti Germany,

says the fibre-enriched Leichte Linie range

has given RügenFisch the opportunity to

differentiate its product not just from rivals

that are higher in fat but also – thanks to

the fibre message – from those offering high

levels of omega-3, a much better-established

benefit in the canned fish arena.

“We hadn’t worked with RügenFisch

before but we thought the market was right

now for such a product,” recalls Janvary.

“When we approached the company they

were actually already in the process of

evaluating new concepts for lighter and

better-for-you products. They thought that

something involving prebiotics would be an

interesting alternative to omega-3, which was

already in the market.”

Janvary says fish is the perfect vehicle for

prebiotics. “Functional products fit really

well with this kind of application because

fish has health at its core. The requirements

of the European Nutrition & Health Claims

Regulation will make it even more important

that you start with a fundamentally healthy

product before you make health claims,

and that means fish is a great carrier for

functional ingredients.”

On-pack, space is restricted by can size

and the requirement for minimum legal

labelling requirements. For this reason,

RügenFisch has restricted itself to stating

simply that Leichte Linie is low in fat and

a source of fibre. But it has also included

Beneo-Orafti’s ‘Beneo’ label, designed by

the ingredients company as both a means

of communicating the benefits of prebiotics,

and a seal of quality, demonstrating there

is enough of the active ingredient in the

product to have an effect.

The logo carries a web address – www.

beneo.com – which consumers can use to

gain more information about inulin and

oligofructose, the chicory-derived prebiotic

ingredients with which the Beneo-Orafti

name has become synonymous. On the site,

visitors learn not just about the fact Beneo

prebiotics are a source of fibre, but also that

they offer benefits in terms of gut health,

boosting the immune system and calcium

absorption.

The Beneo label is Beneo-Orafti’s means

of communicating the benefits of its prebiotic

ingredients to consumers who, it appears,

do not necessarily understand what they are.

This has been borne out by Orafti’s own

research, conducted among consumers across

Europe and the US. At time of writing,

Orafti had released preliminary results from

the UK, which indicated that when asked

to rate the appeal of ingredients on a scale

Fibre-fortified fish carries

Beneo seal of approval

The company behind an innovative fish product fortified with Beneo-branded inulin hopes that presence of the

Beneo ingredient brand on its labels will make it easier for consumers to understand the added-fibre, low-fat

benefits. By RICHARD CLARKE.

APRIL 2009

18

N E W N U T R I T I O N B U S I N E S S

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B E V E R A G E C A S E S T U D Y

Known for its groundbreaking distribution

strategy, unique packaging, quirky product

names, viral marketing and edgy CEO, Jones

Soda was the beverage industry’s company-

to-watch from its start in 1996 until about

2006. Then slowing growth and troubled

strategies in 2007 led market analysts to

recently start asking if Jones Soda “has any

pop left.”But now Jones is once again going where

no beverage company has gone before,

with the much anticipated launch of Jones

GABA, a tea-juice blend containing natural

gamma-aminobutyric acid (GABA for short).

Shown in scientific studies to increase mental

alertness and reduce stress, GABA-infused

products are a sensation in Japan, where

sales reached $122 million (€96 million) in

2006, according to a report in Japanese World,

September 8, 2006. Jones is betting on its

success in North America as well.

And JonesGABA does appear to have all

the makings of a blockbuster product. GABA

has a track record of success in Japan that

would seem to support consumers’ ability to

both understand and feel its benefits; it has a

few supporting studies that have investigated

the effects of orally ingested GABA on

relaxation and immunity in humans; it was

recently given GRAS (generally recognized

as safe) status by the US Food and Drug

Administration; its reportedly immediate

experiential effects are touted to help

professional athletes, weekend warriors,

college students and pretty much everyone

else get in “the zone”; and it’s backed by the

creative power of Jones.

“There is a lot of great science to support

the effectiveness of PharmaGABA,” said

Michael T. Murray, ND, a health and

nutrition author and natural product expert,

who worked with Jones on the technical

development of the product. It has been

shown to counteract the effects of stress

on both the mind and body, by increasing

production of alpha brain waves and

reducing the biological markers of stress,

like cortisol levels, said Murray. “I think this

product will be phenomenal,” he said. “Most

Americans know what it feels like to be

amped up on caffeine, but they have not had

the profound experience of focus and clarity,

while also being relaxed. That is what GABA

provides.”

Can GABA drink bring Jones

Soda back from the brink?Jones Soda is known for taking its products where others have failed to go. But the stakes are high for the

much anticipated launch of JonesGABA, North America’s first ever beverage containing an amino acid touted

to regulate brain functionality. Wildly popular among Japanese consumers, GABA has been shown to improve

mental focus and reduce stress. Jones’ plan is to introduce Americans to a revolutionary ingredient and regain

its place as king of the beverage innovation hill. KAREN RATERMAN reports.

NOVEMBER 20088



For a sports nutrition brand to appeal to both professional athletes and occasional gym goers requires some balancing. Often specialty brands lose their credibility among professionals when they go mainstream, whereas those who start off as a solution for the mainstream only rarely reach the inner circles of sport addicts.

Swedish dairy Norrmejerier is proving an exception to the rule. It manufactures and markets Gainomax Recovery, a high protein and high carb milk-based beverage intended as a recovery drink after training. It has tripled its sales since 2004 and this year sales are up 20% from last year.

FROM HOSPITALS TO GYMS

Gainomax Recovery’s roots date back to 1990 when a resourceful entrepreneur found that hospitals in Denmark were giving a milk-based beverage – similar to what Gainomax Recovery is today – to patients after surgery to facilitate their recovery. The entrepreneur saw the product’s potential for sports nutrition. He introduced the concept in Sweden and Norrmejerier came into the picture as the contract manufacturer. But the anticipated success never materialized – the customer base and the volumes were probably too small, suggests Gainomax’s marketing manager Johan Nylund – and the entrepreneur decided to withdraw some years later. Norrmejerier offered to buy the brand in 1997. The company trusted its knowledge of marketing and distribution channels, and began to push the brand forward.

Today Gainomax Recovery is well known in Sweden. The product is aimed at people who exercise regularly and is developed to replenish nutrients needed by the body to quickly recover energy and maximise the effects of physical exercise. Gainomax Recovery belongs to the fast growing category of recovery drinks and is recommended for

use 5-30 minutes after exercise.It has been on sale in gyms and

other sports facilities since 1990 and in supermarkets since 2004. Originally it was only targeted at elite sportspeople. Communications were focused on educating users about the recovery phase, and the necessary combination of protein and carbohydrates for optimum recovery. In all aspects, its communications and positioning were that of traditional sports nutrition: Focused on high-level athletic performance, with images of sweaty gyms and sportspeople working hard.

However, Norrmejerier is a traditional dairy company and its strength is in retail. In 2002 the company decided to take a chance by widening the consumer target market and heading into the supermarkets. “We started selling regionally, in the northern parts of Sweden, which traditionally is our strongest

area,” Nylund recollects. “It went amazingly well. In 2004 we upgraded to national scale, braced by this successful case.”

Nylund sees the retail route as one of the keys to success. “As we know, it is often diffi cult for smaller players to get in. The retailers want volumes and not too-small products. They also expect the producer to back up the product with promotion and marketing.” Norrmejerier met all these criteria and in return Gainomax got increased exposure.

THE GAINOMAX LINEUP

Currently the Gainomax Recovery beverage is available in raspberry, strawberry, vanilla, banana and chocolate. It is packaged only in a ready-to-drink 250ml Tetra Pak – not in 1 litre packs.

In 2006 the brand was extended with an energy bar, an idea that came directly from the most dedicated consumers who wanted a good snack product. Gainomax Energy Bar is a yoghurt-covered muesli bar which contains a balanced amount of carbohydrates, protein and fat. It contains 1/3 of the recommended intake of fi bre and has an energy content in line with the Nordic Nutrition Recommendations. The product is targeting active men and women who need a nutritious snack before or during training.

Both Gainomax Energy Bars and Recovery beverages retail at approximately SEK 20 ($2.88/€2.06); the beverages may be priced slightly cheaper in retail outlets than in gyms, at SEK 15 ($2.16/€1.54). New Nutrition Businessestimates the total sales to be around SEK 100 million ($14.4 million/€10.3 million) a year. Given that Sweden has a population of just 9.1 million people, pro rata that rate of sales to a larger market such as France and Gainomax is equivalent to a €70 million ($94 million) annual sales brand – or in the US, a $400 million (€297 million) brand.

Monkeying around maxes sales for dairy sports drink

The northernmost dairy in Sweden, Norrmejerier, has shown how a brand can successfully broaden the market for a sports recovery drink, reaching beyond serious athletes to draw in occasional gym goers – and tripling sales since 2004. To illustrate how successful it has been, a brand that achieved a similar level of penetration in a market like the US would be worth over $400 million in retail sales. The key to a Swedish mass-market success? Monkeys and bananas. PATRICIA WIKLUND spoke with marketing manager Johan Nylund.

The Gainomax pack reads: “Gainomax Recovery is recommended 5-30 minutes after training. Gainomax Recovery quickly restores the carbohydrates and protein that the body needs to recover and maximizes the benefi ts of training.”

NOVEMBER 2008

19


B R A N D F A I L U R E C A S E S T U D Y

Netherlands-based ingredient company Lipid Nutrition aims to make PinnoThin one of the ingredients that food, beverage and supplement companies can turn to if they want to market a product for satiety. “The idea of satiety, of something that suppresses your appetite, is easy to understand for consumers,” asserted John Kurstjens, the company’s international marketing manager, in an interview with New Nutrition Businessearlier this year.“Many consumers know they have to reduce food intake to stay healthy – and a product that can help them to do that is something that’s easy to explain and for a food brand it’s an easy message. Other types of weight management – fat burning, for example – are more diffi cult to explain to the consumer.”

When Lipid Nutrition’s attention discovered that in Korea farmers would eat pine nuts in the morning so that they could work all day in the fi elds without feeling hungry, they began to investigate pine nut oil’s effect on satiety. The active component of the oil was found to be the fatty acid pinolenic acid, present in high concentrations in the nuts of the Korean native pine tree (Pinuskoraiensis).Pinolenic acid stimulates the release of two hunger-suppressing hormones in the body, CCK (cholecystokinin) and GLP1 (glucagon-like peptide 1). CCK is usually released in the upper part of the small intestine in response to the presence of fat or carbohydrate in the duodenum. GLP1 is released in the last part of the small intestine in response to fat or carbohydrate in the duodenum. GLP1 is established as a potent regulator of food intake in humans and both hormones exert their

effect by sending satiety signals to the brain, signifi cantly reducing the urge to eat.An in vitro study comparing Korean pine nut oil with Italian pine nut oil and linoleic acid and conjugated linoleic acid (CLA), found that the effect of pinolenic acid in stim-ulating the release of the appetite-suppressant hormone CCK was significantly larger. The effect was next evaluated in a randomised, double-blind crossover clinical study conducted by TNO, the Netherlands’ leading nutrition research institute and one of the leading research centres of its kind in the world. Women who were overweight but otherwise healthy middle-aged women were given a simple breakfast that included 3g of PinnoThin or 3g of a placebo. The subjects who were given PinnoThin were found to have signifi cantly less desire to eat than those given a placebo and within 30-60 minutes PinnoThin had signifi cantly increased the amount of CCK and GLP1 hormones in the blood.PinnoThin has many things in its favour, such as the support of several scientifi c studies which have formed the basis of a

health claim petition to the European Food Safety Authority (EFSA) under the European Union’s new health claim regulations. Lipid Nutrition also aims to provide marketing support for companies who use PinnoThin in their brands through the www.PinnoThin.com consumer website and PR. The company is also aiming for co-branding, whereby the PinnoThin logo will appear on product packaging. Today, a growing number of dietary supplement brands in the US, Europe and Asia use PinnoThin as their active ingredient. Naturally Drinks was the fi rst company to market a food or beverage containing Pinnothin, launching the Naturally Gorgeous drink brand in the UK market in January 2008. A blend of juice and low-fat milk, it delivered the recommended 3g dose of PinnoThin in each 250ml serve with the ingredient added to the juice as an emulsion. As a chilled, short shelf life product there were no oxidation concerns with PinnoThin. The brand was marketed on the basis that it could help the consumer feel “fuller for longer” and PinnoThin was described

Satiety smoothie fails to flyThe launch of the Naturally Gorgeous beverage brand, marketed with a weight-management message, was the

fi rst foray into the food and beverage category for PinnoThin – an appetite-suppressing ingredient based on

Korean pine nut oil that is being commercialised by Netherlands-based lipids specialist Lipid Nutrition. But within

a few months of its launch the Naturally Gorgeous brand had been withdrawn from the market. It is a case study

that illustrates that no-matter how good the science of the ingredient, the risk of failure is high unless brand

marketers can avoid making basic errors in strategy. By JULIAN MELLENTIN.

OCTOBER 2009 35


Failures in Functional Foods & BeveragesAnd what they reveal about success

PPT – 200 slides, product illustrations, charts and tables of data

PDF – 98 pages, 60 product illustrations, charts and tables of data

The functional foods market is a tough one and failure is more common than success. This report tells you what you must do to succeed.

This unique 98-page report examines fifteen case studies of brands and ingredients that have either been withdrawn from the market or have not performed as well as expected.

Part I is a concise 40-page analysis setting out which strategies are most effective and why.

Part II consists of 15 detailed case studies which summarise:

• success factors and common causes of failure• common lessons for pricing, positioning and

marketing• key lessons in selecting ingredients• key lessons in communicating benefits

The health benefit platforms covered include:

• Weight management (satiety and calorie-burning)

• Heart health (cholesterol-lowering, blood pressure-lowering)

• Bone health• Joint health• Beauty and skin• Energy• Digestive health• Brain and eye development

Ingredients featured include:

• Probiotics• Prebiotics• Fibre• Wholegrains• Plant sterols and stanols• Green tea• Omega-3• CoEnzyme Q10• Protein• Soy• Calcium• Glucosamine• Antioxidants

Failures in Functional Foods & Beverages

32 www.new-nutrition.com

sales of yoghurt are highly price-competitive, Danone’s Activia probiotic yoghurt for digestive health retails at a 100% premium to own-label probiotic yoghurts and is the biggest brand of its kind on the market. • In the Netherlands the Hero Fruit2Day brand of fruit juice is a market leader, despite retailing – measured on a price per litre basis – at a 170% premium over leading brands such as Tropicana.

• In both the Netherlands and Germany, dairy giant Campina brought to market in 2007 its Optimel Control brand – an extension of its very successful Optimel dairy brand – with an active ingredient that promotes a sense ofsatiety. Marketed for its weight management benefits in a 100ml “daily dose” package, Optimel Control secured a loyal following among a niche of consumers – despite being priced at a 450% premium to regular yoghurt – and the high repeat purchase rates of this loyal niche made the brand the most successful new product launch (in any category in the supermarket) in Germany in 2007.

• Also in the Netherlands, a 7-pack of Yakult probiotic dairy drink retails for €2.99 for a pack of seven 65ml bottles. That’s equivalent to €6.57 a litre ($8.30). Compare this to regular, non-probiotic milk, which retails for just €0.69 a litre. Needless to say, Yakult is something of a niche brand – its €42 million ($53 million) annual sales in the Netherlands amount to just 5.6 million litres a year, a tiny number compared to the 800 million litres of liquid milk sold in the Netherlands. Moreover, Yakult’s sales are just 250,000 bottles a day, suggesting that just 1.4% of the Netherlands population of 17 million people is drinking Yakult each day.

For any brand to achieve a premium price point, however, it must both score very highly on convenience and connect to other key trends. And in particular such a brand must aim to be niche from the outset – since health is an ever-increasing number of niches whose “premium appeal” is to the 20%-25% of consumers who are actively health-conscious. There is still no place for premiumisation in the mass-market, where consumers are driven still by the need to carefully manage budgets and where every category is still marked out by fierce

0

0.5

0.10

0.15

0.20

0.25

$0.10/oz

AlbertsonsOwn-label

Danone Activia has been phenomenally successful despite selling at a significant price premium over regular,

non-probiotic yoghurt brands such as Yoplait Trix in US supermarkets. As the chart shows, Activia sells at a

100% premium to supermarket own-label regular yoghurts.Source: Albertsons.com

CHART 4: PRICE COMPARISON OF SPOONABLE YOGHURTS IN THE U.S.

$0.154/oz

YoplaitTrix

$0.20/oz

YoplaitYo-Plus

$0.218/oz

DanoneActivia

US $per

ounce



brand, and its expansion to over a billion dollars

in sales worldwide, with 100% growth in the US

alone.Show them the benefit: If customers can’t

“feel the difference” you can “show them” the

difference. This tactic was pioneered in Asia back

in the 1990s by Fonterra Brands in support of

its Anlene brand, a high-calcium milk marketed

throughout Asia which has been clinically proven to

prevent bone-loss. Anlene provides consumers with

a bone-scanning service: teams, made up of trained

health professionals, visit clinics, supermarkets and

shopping malls where they set up bone scanning

machines and offer free bone scans to passers-by

(see illustration). It’s a safe and reliable way for

people to find out about their bone-health. The

reward for this initiative has been that Anlene has

built and maintained market leadership in value-

added milks across Asia – taking a 70% share in

Malaysia for example – and successfully holding

off competitors who do not provide such a bone-

health service. The brand has gone even further

in demonstrating the benefit by developing the

“Anlene Movement’ – a series of walking events

which enable people to participate and “feel the

benefit” of activity and movement.

Justifying a premium price in hard times

All of the above products sell at significant premiums

– energy drinks, for example, are about five times

more at retail prices, compared on a price per litre

basis, than colas. Many probiotic digestive health

drinks sell at eight times the price of comparable

non-probiotic dairy drinks (measured on a price-

per-litre basis). In tough times companies will need

to work harder than ever to justify premium prices

– offering a benefit that the consumer can feel is

one of the strongest ways of earning a sustainable

price premium.

Guerilla marketing in France: these mannequins in shop

windows vividly convey the message about the benefit of

“Drop a jeans size” from consuming Kellogg’s Special K.

Understanding the benefit with The Anlene Bone Health Check: the Anlene brand, the biggest bone-health brand in Asia, has

established its credibility in consumers’ minds by making the benefit clear. Since the mid-1990s Anlene Teams – consumer

education teams, made up of trained health professionals – have visited clinics, supermarkets and shopping malls where they set

up bone scanning machines and offer free bone scans to passers-by. The bone scan is a measure of bone-mass density and it’s a

safe and reliable way for people to find out about their bone health. Anlene Teams have conducted 1.3 million bone scans across

Asia. The data captured by the Anlene Bone Health Check is shared with national and international health agencies addressing

osteoporosis.



price promotions and buy-one-get-one-free deals

from brands such as Danone Actimel and Müller

Vitality. However, functional food markets are

niches and rarely do they evolve into the mass

market. Hence, despite mass-market promotional

tactics, the probiotic drink category eventually

reached a natural ceiling, with its value peaking in

2006. Actimel and Yakult experienced sales declines

that year – both losing ground to the Müller Vitality

brand, a brand with a mass-market image that has

relied heavily on price promotions.

However, Müller seems to have set out to confuse

consumers as much as possible and a brand that

was once, like Actimel and Yakult, one with a clear

probiotic proposition was by 2006 one that also

included prebiotics and added omega-3, offering

digestive health, heart health and brain development

all from one little bottle. Müller had ignored a well-

proven rule of functional foods: if you want to be

around for a long time, it’s focus that works best.

In 2007 the value of the UK’s probiotic drink

category fell 7.3%. Every brand in the top five

experienced a sales decline – in Müller’s case a

catastrophic 14.9% – except one: Yakult.

In 2008, despite recession, the market held

steady at around £167 million ($233 million/€177

million). Market leader Danone Actimel maintained

its high level of marketing investment behind its

brand and increased sales by 4% to £108 million

($150 million/€115 million), giving it an impressive

65% market share.

Yakult, “the expert brand”, maintained its grip

on its high-value niche (it is the most highly priced

daily dose brand selling at a 70% premium to

Actimel, measured on a price per litre comparison)

and finished 2008 with sales and market share

unchanged.

Muller Vitality, by contrast, saw its sales fall a

further 9.7%.

In contrast to Müller’s multiple messages, Yakult

offers one clear health benefit – intestinal wellness

– and always has done. This enables the brand to

position itself as “the expert in gut health”. That

expert message appeals most to the people who are

most serious about health and who are the most

loyal consumers, with high repeat purchase rates. In

CHART 1: THE TOP 5 SELLING ENERGY DRINKS IN THE US 2007*, SUPERMARKET SALES ONLY

Red Bull dominates in the US, as it does in almost every market it is a player in, outselling its closest rival,

Hansel Natural’s Monster, by more than $200 million (€135 million) in 2007. The third- and fourth-biggest

sellers, Rockstar and Full Throttle, are owned by Coke, while the No.5 energy drink, Amp, is from the

PepsiCo stable.

Source: IRI

*Data includes total food, drug & mass merchandise store sales (figures don’t include Wal-Marts or convenience stores).

Sales in

million

($)

0 Red Bull

$343m/€259m

MonsterRockstar

AMP

50

100

150

200

250

300

350

Full Throttle

$136m/€103m

$96m/€72m

$45m/€34m$28m/€21m

Published by

Report

Failures in Functional

Foods and Beverages

And What they Reveal About Success

2nd edition

by Julian Mellentin

Published May 2009

Ordering is easy…see inside back cover or visit www.new-nutrition.com

PRICE FOR EITHER PDF OR PPT: €200 / $295/ £190/ A$345 / NZ$395 / ¥23,000 / C$295

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A 20% DISCOUNT

OCTOBER 200936



PDF – 59 pages, product illustrations, charts and tables of data

In the market for kids’ foods and drinks, it’s in beverages that you will find the most examples of success – and some of the smartest innovations. The reasons include:• superior convenience• more scope for packaging innovation• greater versatility in product formats• beverage formulators are particularly skilled at making most things taste good• consumers are more willing to experiment with beverages• better margins encourage innovation.

The largest individual segment of the US kids’ food and drink market is beverages, and it’s a similar story in Europe.

Marketing Kids’ Healthy Beverages begins with a concise 19-page summary of six possible strategies that beverage companies can follow whether they are renovating an old brand, as illustrated by the case study of Nestlé Juicy Juice and Britvic Fruit Shoot, or creating a new brand, as illustrated by the case studies of Crayons and Froose.

The report then sets out, over 38 pages, 10 detailed case studies based on interviews with the companies concerned and supported by supermarket sales data. They are:• Nestlé Juicy Juice• Smartfish• Fruit Shoot• Y Water• Magic Fruit Potions• Froose• Republic of Tea• Crayons• The Switch




BUY THE PDF &

PPT TOGETHER & GET

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These case studies cover a wide range of possible categories and benefits including:• Immunity• Omega-3• Free-from• All-natural• Digestive health• Packaging innovation• Teens and “tweens”

For any company, large or small, looking to create a successful proposition in kids’ beverages, this report provides practical insights and examples.

Published August 2009

Marketing Kids’ Healthy Beverages: Ten key case studies

Marketing Kids’ Healthy Beverages

www.new-nutrition.com15

UNILEVER PUTS KID ANGLE ON DAILY DOSE FRUIT DRINKUnilever’s Knorr Vie daily dose drink, which promises to give you 50% of your daily requirement of fruits

and vegetables in a single 100ml bottle, was last year extended to include a kid-specific product. Called

Knorr Vie Kidz, it was launched in the Netherlands and Belgium with further European launches to

follow.

Unilever says that Knorr Vie Kidz has been formulated specifically to meet the taste preferences of

children and it is intended as a healthy snack which also helps parents get into their children their daily

requirement of 200g of vegetables and fruit. Communications emphasise that Kidz is not intended to replace fruits and vegetables, but should be

used as a supplement on top of the normal consumption of vegetables and fruit or to help parents on

those days when a child doesn’t get enough to eat. Unilever is also clearly targeting “picky eaters” – a

distinct group identified in many companies’ consumer research – who refuse to eat vegetables or fruit.The product is described as containing 100% natural ingredients with no added sugars and

preservatives and naturally rich in vitamin C (each 100ml bottle provides 50% of the recommended

daily value). The packages carry the “I choose wisely” logo (in Dutch: Ik kies bewust), which is carried

by brands in the Netherlands that meet independently-established healthy eating criteria. Knorr Vie Kidz is available in two flavours: banana-peach-pumpkin and banana-carrot-passionfruit. It

retails in a pack of three 100ml bottles at a price of €1.99 ($2.94) per pack, compared to €1.89 ($2.79)

for regular Knorr Vie.

Launched in 2005, the Knorr Vie brand can be found in ten European countries. In some it has been

successful, such as Belgium, which has a population of just 10 million and where in its first year the brand earned €5.5 million ($8.1 million) in retail sales.

In the larger market of the Netherlands the brand appears to have reached over €10 million ($14.8 million) in retail sales – at best – in 2006. But in 2007 sales declined.

As Knorr Vie is a super-premium product, priced at €6.30 ($9.30) per litre – compared to around €2.70 ($3.90) a litre for Tropicana juice – the volume sold is very small, perhaps less than 2 million litres a year (compared to a total Dutch juice market of over 400 million litres), making Knorr Vie a true niche brand.

The kids market is a core target for Unilever which uses a consumer segmentation model called the Unilever Vitality Life Goals Model as the basis for all its strategy, product development and consumer targeting. The model includes a segment called Give Children a Good Start, which recognizes parents’ increasing desire to, “give their children a good start so that they will be healthy, happy and successful in later life.”

Knorr Vie Kidz.Goedgekeurd door moeders.

Daarom zijn kinderen zo gek op Knorr Vie Kidz. Elk esje is een extra portie groenten en fruit.

Gemaakt van 50% van de groenten en fruit die iedereen - volgens aanbevelingen van internationale voedings-

deskundigen - elke dag nodig heeft. Zonder kunstmatige ingrediënten, zonder toegevoegde suikers en ... zonder stukjes.

En zo lekker dat zelfs het meest kieskeurige kind er gek op is.

Advertising for Knorr Vie Kidz in the Netherlands carries the tagline: Approved by mothers. Liked by kids.



and the Middle East. It has estimated annual retail sales in excess of €2 billion ($2.5 billion) and still growing.

The immunity concept is communicated in consumer language using Actimel’s core messages, which are:

Helps maintain your body’s natural defences Helps protect your body from the inside

Senior Danone executives have been quoted in the trade press as attributing between 30% and 50% of the sales of Actimel (depending on the country) to mothers buying it for their children.

Actimel advertising has always featured children prominently and makes the brand’s relevance to children clear, but there was until recently no overt positioning of the product as kid-specific; instead Actimel used a broader message about “family health”. More recently the positioning has become more overt.

In trying to find new health directions for its Juicy Juice brand (see Case Study 1) Nestlé found that immunity was identified by mothers as the most important benefit for their two- to five-year-olds.

Interestingly, these mothers were also very concerned about digestion (see section 2.6 for a discussion of the as-yet untapped digestive health opportunity), and as part of its development of new extensions for Juicy Juice Nestlé formulated two separate products, one for immunity, one for digestive health, and test-marketed them.

But, Nestlé said, they in fact cannibalised one

another since they were perceived by consumers as meeting the same need. So Nestlé decided to focus the positioning of the resulting product on immunity rather than digestive health since, the company said, “For the parent, if it’s choosing between the need for having a healthy child who doesn’t get sick often, the benefits are tremendous versus having a kid that’s constipated. If the child is sick, you can’t take him to school or go to work yourself, and you may not be getting paid and you need babysitting. So we wanted to lead with the immunity benefit because it was compelling to moms.”

Actimel: the world’s biggest immunity brand

Valio Dairy, in Finland, launched its Gefilus Kidius range in 2004. Kidius includes spoonable yoghurts, yoghurt drinks and a snack cheese, called Magic Cheese. Three slices – or 30g – of Magic Cheese, a lactose-free, low-fat Edam-style cheese, contains enough LGG to boost kids’ natural defences, accord-ing to Valio.



seen as “bad” additives.

As with most aspects of health, it’s a global trend.

Chinese parents are (perhaps unsurprisingly) more

highly concerned with preservatives and additives

in new products than parents in the UK and US,

according to data from consumer researchers Health

Focus International. This finding was in 2006 (see

Chart 1), even before the recent melamine-in-milk

scandal.As a result, all of the following types of brand

communications have established themselves – and

at least some of these messages are used by major

brands – as meaning “healthy” to one or another

group of parents:

• no added sugar

• no added sweeteners

• no added preservatives

• no artificial additives, colours, flavours

• dairy-free

• wheat-free

• gluten-free

• no trans-fats

• no hydrogenated oils

• no high-fructose corn syrup

Hitting at least a handful of these buttons has

become a necessity for any brand that wants to pass

the scrutiny of the health-conscious parent. It has

become a basic part of the strategy even of mass-

market brands.

“No artificial colours or flavours…covers what

mum wants and what she wants to give her child,”

comments Noel Clarke, senior brand manager for

Fruit Shoot, a very successful mass-market fruit-

flavoured water brand in the UK with $179 million

(€125 million) in annual sales (see Case Study 3).

“As a minimum you have to deliver that.”

As Case Study 1 illustrates, even a mainstream

brand such as Nestlé now puts “no added” centre-

stage. “Whether their kids are under two, or two

to five years old, or six-plus,” said Victoria Nuevo-

Celeste, Juicy Juice Marketing Manager at Nestlé

USA, “if we asked [parents] what benefits most

interested them in foods or beverages, low sugar

and extra calcium were the things they were most

interested in across the board. So we decided to

make the products lower in sugar. It’s harder to

differentiate by adding calcium.”

As a result Juicy Juice’s over-arching brand

message is:Naturally Lower in Sugar: With filtered water to lower

the natural sugar content, and enhanced with nutrients.

As always, no added sugars, artificial flavours or

preservatives.

SOME RULES FOR SUCCESS IN NATURAL AND “FREE-FROM”

1. There are many possible approaches that you can take to make a “free-from” message. It does not

need to be as rigid as “gluten-free” or “dairy-free” – nor do you need to try to cover every possible free-

from option. Use a “free-from” benefit that is a logical fit to your product.

2. As far as cost and efficacy permits, choose ingredients that are “as natural as possible” and ingredients

that the consumer can understand.

3. If your ingredient does not score highly in consumers’ perceptions as “natural” – even though

technically it may be – you need to invest in consumer education to enable the consumer to accept

your ingredient.

Sleep problems, 35%

Lack of appetite, 37%

A balanced diet, 40%

Growth and physical

development (height, bones,

muscles), 41%

Resistance to disease (colds,

coughs), 48%

CHART 1: TOP 5 PARENTAL HEALTH CONCERNS,

CHINA.

Source: Health Focus International

Published by Report

Marketing Kids’

Healthy Beverages:

Ten key case studies

OCTOBER 2009 37


Energy shots: birth of a new premium-priced, high-growth categoryStrategies, trends and case studies from the US and UK


PDF – 40 pages, 60 product illustrations, charts and tables of data

Such is the value to consumers of the proposition of a daily dose of energy with no added sugar that in the US alone this new category has soared to over $350 million in retail sales in less than two years - despite recession and despite selling at a massive 400% price premium over “mainstream” energy drinks such as Red Bull!

This unique 40-page report uses detailed brand sales data, comparisons of product pricing and advertising messages and claims, as well as six detailed case studies, to explain how, in both the US and the UK, energy shots have achieved the impossible.

Based on interviews with executives at all the leading companies in this new category as well as beverage industry experts the report sets out brief and practical guidelines for anyone else looking to replicate this success elsewhere.We summarise:

• success factors, and common causes of failure

• common lessons for pricing, positioning and branding

• key lessons in communicating benefits

10 REASONS TO BUY:

• Concise summary of how a new super-premium priced category has emerged despite recession

• Unrivalled analysis of the facts, based on 20 years of marketing and branding experience, 15 years dedicated to the business of food and health

• Independent and opinionated

• Supported by detailed monthly sales data covering over 60 brands

• We show which brands are most successful and why and which ones are struggling

• Supported by interviews with industry executives and beverage experts

• Illustrated with a wealth of colour product images and data charts

• Illustrated with advertising and other communications tools

• A very affordable price, thanks to our unique expertise

• Sent to you in PDF or Powerpoint, or both if you want

Published July 2009

Energy shots: birth of a new premium-priced, high-growth category


2.4 Case Study – Zen Shot promises “natural energy”Zen is among the hundreds of small-time players who see the ten-figure breadth of the shot market and wish for just a sliver of it. The product by Addison, Texas-based Shot Me Up LLC has beenlooking for a break since it came on the market a couple of years ago.Zen’s proposition is that its green-tea base gives consumers a caffeine-free kick of energy – about the same as that in five to eight cups of green tea – as well as a boost of Vitamins B and C, panax ginseng, aloe barbadensis leaf juice, and agave nectar, which has a low glycemic index so that it breaks down slowly in the body – preventing the crash effect.

A Zen Shot provides just 20 calories and contains 5586mg of a green tea extract patentedby HerbaSway Laboratories, an American manufacturer of herbal concentrates. “Our product is different,” co-founder Alex Hernandez said. “We’re more of an antioxidant product, without caffeine. So customers who buy our product wouldn’t buy 5-Hour Energy. They’re careful about what they put into their bodies. They’re not looking for a buzz; it’s about the healthy antioxidants you get.”Zen Shots retail for a suggested $2.99 (€2.13) per 20z (60ml) bottle and are available in original, mint, orange, lemon and berry flavours. So far they’re available only in Texas, at Whole Foods Markets,

and some chiropractic and acupuncturists’ offices.“We’re going after the holistic medicine market and trying to go higher-end in it,” Hernandez said. “5-Hour Energy isn’t carried by any of those kinds of institutions because it doesn’t meet the requirements from a holistic standpoint.”Even nearly all-natural Zen Shots, he said, need to become purer still for his targeted distribution points. “We have .0001 percent sodium benzoate to preserve the aloe,” Hernandez explained. “But I’m looking for other ways to do it; I’m investigating a natural preservative option so we can be 100 percent natural.”Nevertheless, his company hasn’t been able to expand distribution of Zen Shots much at all, in part because of financial pressures. A couple of years ago, Hernandez predicted to this publication that Zen Shots would be distributed nationally by the end of 2008 and internationally by sometimein 2009.

“We’re on a shoestring budget now,” he said, “so we have to take it slow. We don’t want to get overleveraged right now. There’s no urgency to get this thing off the ground. But I have some hot potential clients that could come through in the next three months and make a big difference.”



5-Hour Energy has built its brand position on a clear platform of being the healthier and more convenient option, as these two comparison charts from the brand’s website show.

And with the figure of a man running, there’s a hint of performance on there.”

Another key has been the tremendous resources Living Essentials has pumped into marketing. It began largely with TV ads that since have become ubiquitous on cable channels including ESPN, most recently with the “no-sugar-crash” message. The ads assert that popular energy drinks have up to 12 teaspoons of sugar each. And the company mostly has stuck with TV because of its effectiveness.

“We tried just about everything when we launched it, and whenever we put a good TV ad out there, sales have gone up,” Sperber said. “Otherwise,

[sales] dip out.” Otherwise, Living Essentials does a limited amount of print advertising in “vertical channels like Truck Driver magazine, where we know everybody in that particular audience could use our product.”

All the pieces of the formula – product, positioning, marketing and more – have come together fabulously for 5-Hour Energy. It quickly built a following but remained largely under the radar as it built the energy-shot segment and kept the whole thing for itself for the first couple of years.

In 2007, sales exploded to $59 million (€42



2. The US market: brand sales market data

and forecasts

2.1 Market data

Statistics on the emerging energy shots category still

are a bit hard to come by. Information Resources

Inc., for instance, hasn’t recognized it as a category

yet. As is often the case with new categories, there

are wide variations in estimates of the size of the

energy shots market. This is partly because energy

shots are retailed through a variety of channels,

especially convenience stores and petrol stations,

which are not normally included in supermarket

scanning data. But Beverage Industry News says that

the energy-drink segment overall is growing at a

25% clip. And Bevnet estimated the shot category

per se at about $100 million (€71 million) in US

sales in 2007 and as much as $500 million (€356.5

million) in 2008. Nielsen data give a different

picture. The range of estimates of the size of the US market

is as follows:

High end: Bevnet, a normally reliable website

for US beverage industry news, estimated the size

of the energy shot category at $100 million (€71

million) in 2007 and as much as $500 million

(€356.5 million) in 2008.

Low end: Nielsen data, which is based on

actual sales at retail outlets where data is gathered

by Neilsen, puts the market at around $250 million

(€178 million) in the 52 weeks ending February 21st

CHART 1: US SALES OF ENERGY SHOTS IN 2008, SHOWN BY MONTH

The chart shows actual sales in each month for market leader 5-Hour Energy and the total sales of its

competitors. It underscores the extent to which 5-Hour Energy has created the category.

Source: Nielsen

$millions

1Jan08

2Feb08

3Mar08

4Apr08

5May08

6Jun08

7Jul08

8Aug08

9Sep08

10Oct08

11Nov08

12Dec08

13Jan09

20,000,000

18,000,000

16,000,000

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

5-HourEnergy

Total other shots

Published by Report

Energy shots: birth

of a new premium-

priced, high-growth

categoryStrategies, trends and case studies

from the US and UK




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Marketing Kids’ Healthy Beverages: Ten key case studiesIn the market for kids’ foods and drinks, it’s in beverages that you will find the most examples of success – and some of the smartest innovations.

Organic and all-natural kids’ snacks and baby foodsSeven key case studiesHealth-conscious parents seem committed to continuing to buy healthy food for their children despite the recession, even as they economise in other areas. This 42-page report looks in detail at these different approaches. Using seven detailed case studies we analyse the performance and strategies of leading organic and “all-natural” kids’ snacks and babyfood brands in the US and UK.

Failures in Functional Foods & Beverages: And what they reveal about successThe functional foods market is a complex one. Success with a new product or ingredient is rare. This unique 98-page report examines failures by functional brands and ingredients. It sets out the lessons that can be applied by anyone trying to develop an effective strategy for a brand or trying to commercialise nutrition science and offers concise strategies for reducing the risk of failure.

Energy shots: birth of a new premium-priced, high-growth categoryStrategies, trends and case studies from the US and UKSuch is the value to consumers of the proposition of a daily dose of energy with no added sugar that in the US alone this new category has soared to over $350 million in retail sales in less than two years - despite recession and despite sell-ing at a massive 400% price premium over “mainstream” energy drinks such as Red Bull!

10 Key Trends in Food, Nutrition & Health 2009Our annual review, 10 Key Trends in Food, Nutrition & Health, is one of the most sought-after publications in the food industry. The report identifies the 10 mega-trends that will have the most impact on the food and beverage industries over the year ahead. It points companies towards some clear and practical strategies for their functional food and beverage developments, production and marketing.

Trends & Strategies in Weight Management: Ten Key Case StudiesOur concise analysis shows which brand strategies are most effective and why, which ingredient strategies are most effective and why and sets out the key market and consumer trends. Our analysis is illustrated with ten detailed case studies which cover satiety and fat burning and look at how to use weight management to revive old brands or create new ones.

Superfruit: strategy for superfruit successSuperfruits are the product of a strategy, not something you find growing on a tree.Superfruits are revolutionising the way consumers relate to fruit and fruit-based products and they’re growing their market fast – from 40%-100% every year. And yet just a handful of fruits have crossed over from commodity status to superfruit stardom. This guide provides a checklist for superfruit success.

Probiotics: Successful Strategies from the Global MarketplaceThis report is written for anyone trying to develop an effective strategy in the challenging and fast-changing area of probiotics. It sets out the seven steps to creating a successful probiotic brand and describes probiotic strategy both in dairy and emerging new segments such as fruit juice and solid foods.

Functional and Health-Enhancing Juices: 7 Key TrendsUsing 15 detailed case studies this report analyses the functional and health-enhancing juice business. It explains that digestive health, behind superfruits,

is the single most-promising trend for the juice industry – and demonstrates how two companies have quietly built digestive brands worth over $50 million in annual sales. It explores juices with added ingredients and it points out that the areas of beauty, energy and weight management all have the potential for profitable growth.

The Food & Health Marketing HandbookIn a competitive world how do you take your technology to market so that it’s your product that wins at the point of purchase? This handbook tells you how to get the best out of the science and the health benefits of your ingredients or products.

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Anlene: What makes the world’s biggest bone-health brand so successful? Positioned as “Expert in Bone Nutrition”, Fonterra’s Anlene dairy brand dominates the high-calcium milk segment in Asia and is the biggest bone health brand in the world. Anlene has achieved that position as the result of both innovation in science and innovations in marketing, marketing communications, packaging and products. It’s a case study that provides a model of best practice for anyone looking to communicate clinically-proven benefits.

Danone Actimel: Innovation Builds a Probiotic Mega-BrandDanone’s Actimel probiotic drinking yoghurt is the world’s biggest immunity brand and one of the world’s biggest and most successful probiotic brands. In this report Actimel’s marketing communications, pricing, packaging, labeling, merchandising, advertising and consumer insights are analysed and explained in detail and illustrated with colour photographs, charts and images from advertisements to provide valuable lessons from which all food and beverage businesses can learn.

Innocent Drinks: What makes Europe’s fastest-growing smoothie brand so successful? For any company, large or small, looking to create a successful health proposition the story of the meteoric rise of smoothie makers Innocent Drinks shows what can be achieved in a tough, highly competitive category. Innocent’s strategies are not elusive, nor unachievable – they are instead steps that any company can easily take to propel its brands to new levels.

Gainomax: How to create an expert brand in sports nutritionGainomax has shown how a brand can successfully broaden the market for a sports recovery drink, reaching beyond serious “elite” athletes to draw in occasional gym goers and other mainstream consumers while maintaining its loyal following among the elite athletes.

Cranberries: How Ocean Spray made them the world’s most successful superfruitCranberries’ rise to success as “the original superfruit” is well-known. Less well-understood is that cranberry sales actually declined for several years. That decline was turned around by a focus on innovative new product development and effective brand communications. This 35 page case study shows how Ocean Spray - and other companies in the cranberry field - have already moved cranberry far beyond simple cranberry cocktail.

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N EW N UTRITION BUSINESS - global-nutrition.co.jp€¦ · N EW N UTRITION BUSINESS VOLUME 15 NUMBER 1 –nutrition.com OCTOBER 2009 ISSN 1464-3308 Continued on page 3 Food and beverages